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The most recent balance sheet of Raconteurs Inc in millions

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?

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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