Question

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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  • CreatedApril 17, 2014
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