Question

1. Consider the following data for Company Y: Balance Sheet Balance Sheet as of: Jan-01-2019 Dec-31-2019...

1. Consider the following data for Company Y:
Balance Sheet
Balance Sheet as of:
Jan-01-2019 Dec-31-2019
Currency Million USD Million USD
ASSETS
Cash and Equivalents              4.7            10.5
Total Cash & ST Investments              4.7            10.5
Accounts Receivable              1.6              2.0
Other Receivables              1.0              1.6
Total Receivables              2.6              3.6
Inventory              9.6              9.9
Prepaid Exp.              6.5              3.6
Other Current Assets                -                1.8
Total Current Assets            23.4            29.4
LIABILITIES
Accounts Payable              7.9              9.4
Accrued Exp.            17.6            16.3
Current Portion of LT Debt              0.7              0.8
Current Portion of Leases              0.3            23.3
Unearned Revenue, Current              3.3              3.0
Other Current Liabilities              3.5              5.4
Total Current Liabilities            33.3            58.2
Compute this company’s current ratio, quick ratio and cash ratio in 2018 and 2019. Just do the calculation and keep the answers to two decimal points; there is no need to discuss anything. (11 points)
2018 2019
Current Ratio
Quick Ratio
Cash Ratio
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Homework Answers

Answer #1

Answers:

2018 2019
Current Ratio 0.70 0.51
Quick Ratio 0.22 0.24
Cash Ratio 0.14 0.18

Explanation

Current Ratio = Current Asset / Current Liability

2018 = 23.4 / 33.3 = 0.70

2019 = 29.4 / 58.2 = 0.51

Quick Ratio = Quick Asset / Current Liability

= Cash & Cash Equivalents + Reveivables / Current Liability

   2018 = 7.3 / 33.3 = 0.22

2019 = 14.1 / 58.2 = 0..24

Cash Ratio = Cash & Cash Equivalents / Current Liability

2018 = 4.7 / 33.3 = 0.14

2019 = 10.5 / 58.2 = 0.18  

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