Question

Financial​ ratios: Liquidity. The financial statements for Tyler​ Toys, Inc. are shown below: Calculate the current​ ratio, quick​ ratio, and cash ratio for Tyler Toys for 2013 and 2014. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders?

Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
	2014	2013
Revenue	$14,146,664	$13,566,518
Cost of goods sold	$-8,447,425	$-8,131,347
Selling, general, and administrative expenses	$-998,674	$-981,484
Depreciation	$-1,497,772	$-1,471,736
EBIT	$3,202,793	$2,981,951
Interest expense	$-375,946	$-354,085
Taxes	$-1,074,202	$-998,589
Net income	$1,752,645	$1,629,277

2014 2013 ASSETS Current assets Cash Tyler Toys, Inc. Balance Sheet as of December 31, 2013 and 2014 2014 2013 LIABILITIES Current liabilities 191,933$ 187,757 Accounts payable 181,741 $ 121,176 Short-term debt 667,182 $ 631,930 Total current liabilities 588,5735 563,406 Long-term liabilities 1,629,429 $ 1,504,269 Debt Other liabilities Investments Accounts receivable 1,546,096 $ 312,229 $ 1,858,325 $ 1,456,820 332,068 1,788,888 $ Inventory Total current assets $ $ $ 7,285,819 $ 1,462,681 $ 6,604,775 1,345,094 Long-term assets

Answer 1

Ratio	Formula	2014	2013
Current Ratio	Current Asset/Current Liability	0.876827	0.840896

Ratio	Formula	2014	2013
Quick Ratio	(Cash+Investment+AR)/Current Liability	0.560104	0.525949

Ratio	Formula	2014	2013
Cash Ratio	(Cash+Investment)/Current Liability	0.201081	0.172696

This ratio should not change when  in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders as it will not change cash/inventory/AR/AP etc.