You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the...

You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $420,000; accounts receivable = $1,160,000; inventory = $2,060,000; accrued wages and taxes = $480,000; accounts payable = $780,000; and notes payable = $560,000.

Calculate PattyCakes’ current ratio. (Round your answer to 2 decimal places.)

Current ratio times

Calculate PattyCakes’ quick ratio. (Round your answer to 2 decimal places.)

Quick ratio times

Calculate PattyCakes’ cash ratio. (Round your answer to 2 decimal places.)

Cash ratio times

Solutions

Expert Solution

Current Assets:
Cash and marketable securities	4,20,000
Accounts Receivable	11,60,000
Inventory	20,60,000
Total Current Assets	36,40,000

Current Liabilites:
Accrued wages and taxes	4,80,000
Accounts payable	7,80,000
Notes Payable	5,60,000
Total Current Liabilities	18,20,000

Current ratio = Current Assets / Current Liabilities
Current ratio = 3,640,000/1,820,000
Current ratio times = 2 times

Quick ratio = Quick Assets / Current Liabilities
Quick ratio = (3,640,000-2,060,000)/1,820,000
Quick ratio times = 0.87 times

Cash ratio = Cash and Cash equivalents / Current Liabilities
Cash ratio = 420,000/1,820,000
Cash ratio times = 0.23 times

jeff jeffy answered 1 year ago

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