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Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current...

Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current assets and current liabilities at the end of two recent years: Current Year (in millions) Previous Year (in millions) Cash and cash equivalents $4,622 $5,011 Short-term investments, at cost 3,283 9,307 Accounts and notes receivable, net 10,435 9,546 Inventories 2,751 1,834 Prepaid expenses and other current assets 917 678 Short-term obligations 367 3,894 Accounts payable and other current liabilities 8,684 7,938 Income taxes payable 119 728 a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place. Current Year Previous Year

Solutions

Expert Solution

1
Current ratio = Current assets/Current liabilities
Current ratio:
Current year 2.4 =22008/9170
Previous Year 2.1 =26376/12560
Current ratio = Quick assets/Current liabilities
Quick ratio:
Current year 2.0 =18340/9170
Previous Year 1.9 =23864/12560
Workings:
Current year Previous Year
Cash and cash equivalents 4622 5011
Short-term investments 3283 9307
Accounts and notes receivable, net 10435 9546
Inventories 2751 1834
Prepaid expenses and other current assets 917 678
Total Current assets 22008 26376
Current year Previous Year
Cash and cash equivalents 4622 5011
Short-term investments 3283 9307
Accounts and notes receivable, net 10435 9546
Quick assets 18340 23864
Current year Previous Year
Short-term obligations 367 3894
Accounts payable and other current liabilities 8684 7938
Income taxes payable 119 728
Total Current liabilities 9170 12560

ekkarill92 answered 2 years ago
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