Problem

A recent balance sheet of Sweet as Sugar included the following items, among others. (Doll...

A recent balance sheet of Sweet as Sugar included the following items, among others. (Dollar amounts are stated in thousands.)

Cash 

    $ 49,630

Marketable securities (short-term)

  65,910

Accounts receivable 

  25,330

Inventories 

  44,000

Prepaid expenses 

  5,850

Retained earnings

   350,000

Notes payable to banks (due within one year)

  28,000

Accounts payable  

   4,900

Dividends payable..  

  1,800

Accrued liabilities (short-term)

   21,500

Income taxes payable  

    8,500

The company also reported total assets of $600,000, total liabilities of $90,000, and a return on total assets of 20.percent.

Instructions

a. Compute Sweet as Sugar’s: (1) quick assets, (2) current assets, and (3) current liabilities.


b. Compute Sweet as Sugar’s: (1) quick ratio, (2) current ratio, (3) working capital, and (4) debt ratio. (Round to one decimal place)


c. Discuss the company’s liquidity from the viewpoints of (1) short-term creditors. (2) long -term creditors, and ( 3) stockholders.

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