Question

The most recent balance sheet of Raconteurs, Inc. (in millions) is as follows:
Current assets  
Cash and marketable securities .......... $ 10
Accounts receivable ............. 40
Inventory ................. 60
Total ................... $110
Current liabilities  
Accrued wages and taxes ........... $ 5
Accounts payable .............. 35
Notes payable ................ 30
Total ................... $ 70
a. Calculate Raconteurs’ current ratio and acid-test (quick) ratio.
b. Benchmark ratios for the current and acid-test (quick) ratio are 1.50 and 1.20, respectively. What can you say about the liquidity of Raconteur’s operations based on these two ratios?



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  • CreatedOctober 31, 2014
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