Question

At the end of​ 2015, Apple had cash and​ short-term investments of $41.77 ​billion, accounts receivable of $35.79 billion, current assets of $89.87 ​billion, and current liabilities of $80.89 billion.

a. What was​ Apple's current​ ratio?

b. What was​ Apple's quick​ ratio?

c. What was​ Apple's cash​ ratio?

d. At the end of​ 2015, HPQ had a cash ratio of 0.44​, a quick ratio of 0.79 and a current ratio of 1.11. What can you say about the asset liquidity of Apple relative to​ HPQ?

Answer 1

Answer of Part a:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $89.87 / $80.89
Current Ratio = 1.11:1

Answer of Part b:

Quick Ratio = (Cash and Short Term Investment + Accounts Receivable) / Current Liabilities
Quick Ratio = ($41.77 + $35.79) / $80.89
Quick Ratio = $77.56 / $80.89
Quick Ratio = 0.96

Answer of Part c:

Cash Ratio = Cash and Short Term investment / Current Liabilities
Cash Ratio = $41.77 / $80.89
Cash Ratio = 0.52

Answer of Part d:

Apple generally has more liquid assets than HPQ relative to Current Laibilities.