The following information has been extracted from the financial statements of Blue Hills Ltd. 2018 2017...
The following information has been extracted from the financial statements of Blue Hills Ltd. 2018 2017 Cash at bank $165,000 $191,000 Marketable securities 370,000 339,000 Accounts receivable 435,000 408,000 Inventory 1,000,000 1,018,000 Prepaid expenses 33,000 83,000 Plant and equipment 1,750,000 1,800,000 Accounts payable 880,000 798,500 Bills payable 53,000 48,500 Accrued expenses 6,000 4700
calculate current ratio and quick ratio of 2017 and 2018
Homework Answers
| 2017 | 2018 | ||||||||
| Current Ratio | 2.39 | 2.13 | |||||||
| Quick Ratio | 1.1 | 1.03 | |||||||
| Explanation | |||||||||
| 1 | Current Ratio | ||||||||
| Current Ratio = Current Assets / Current Liabilities | |||||||||
| In this given question, | |||||||||
| Current Assets = Cash + Marketable Securieties + Accounts Receivables + Inventory + Prepaid Expenses | |||||||||
| Current Liabilities = Accounts Payable + Bills Payable + Accrues Expenses | |||||||||
| For 2017 | |||||||||
| Current Assets = $ 191,000 + $ 339,000 + $ 408,000 + $ 1,018,000 + $ 83,000 = $ 2,039,000 | |||||||||
| Current Liablities = $ 798,500 + $ 48,500 + $ 4,700 = $ 851,700 | |||||||||
| Current ratio ( 2017 ) = $ 2,039,000 / $ 851,700 | |||||||||
| = 2.39 | |||||||||
| For 2018 | |||||||||
| Current Assets = $ 165,000 + $ 370,000 + $ 435,000 + $ 1,000,000 + $ 33,000 = $ 2,003,000 | |||||||||
| Current Liablities = $ 880,000 + $ 53,000 + $ 6,000 = $ 939,000 | |||||||||
| Current Ratio ( 2018 ) = $ 2,003,000 / $ 939,000 | |||||||||
| = 2.13 | |||||||||
| 2 | Quick Ratio | ||||||||
| Quick Ratio = Quick Assets / Current Liablities | |||||||||
| In this given question, | |||||||||
| Quick Assets = Cash + Marketable Securieties + Accounts Receivables | |||||||||
| Or | |||||||||
| Quick Assets = Current Assets - Prepaid Expenses -Inventories | |||||||||
| Current Liabilities = Accounts Payable + Bills Payable + Accrues Expenses | |||||||||
| For 2017 | |||||||||
| Quick Assets = $ 191,000 + $ 339,000 + $ 408,000 = $ 938,000 | |||||||||
| Current Liablities = $ 798,500 + $ 48,500 + $ 4,700 = $ 851,700 | |||||||||
| Quick Ratio ( 2017 ) = $ 938,000 / $ 851,700 | |||||||||
| = 1.10 | |||||||||
| For 2018 | |||||||||
| Quick Assets = $ 165,000 + $ 370,000 + $ 435,000 = $ 970,000 | |||||||||
| Current Liablities = $ 880,000 + $ 53,000 + $ 6,000 = $ 939,000 | |||||||||
| Quick Ratio ( 2018 ) = $ 970,000 / $ 939,000 | |||||||||
| = 1.03 | |||||||||
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