Question

You are evaluating the balance sheet for SophieLex's Corporation. From the balance sheet you find the following balances: cash and marketable securities = $450,000; accounts receivable = $1,100,000; inventory = $2,000,000; accrued wages and taxes = $450,000; accounts payable = $750,000; and notes payable = $500,000. Calculate SophieLex's current ratio. (Round your answer to 2 decimal places.) Current ratioſ times Calculate SophieLex's quick ratio. (Round your answer to 2 decimal places.) Quick ratioſ times Calculate SophieLex's cash ratio. (Round your answer to 2 decimal places.) Cash ratioſ times

Answer 1

A) Current ratio = Current asset / Currrnt liabilities

= cash and marketable securities + accounts receivable + inventory / notes payable + accrued wages and taxes + account payable

= 450,000 + 1,100,000 + 2,000,000 / 500,000 + 450,000 + 750,000

= 3,550,000 / 1,700,000

= 2.09 times

B) Quick ratio = Current asset - inventory / current liabilities

= 3,550,000 - 2,000,000 / 1,700,000

= 1,550,000 / 1,700,000

= 0.91 times

C) Cash ratio = cash and marketable securities / current liabilities

= 450,000 / 1,700,000

= 0.26 times