JRL's financial statements contain the following information: Cash ......................................$400,000 Marketable securities........... 115,000 Accounts receivable ..............800,000 Inventory ................................950,000
Question:
JRL's financial statements contain the following information:
Cash ......................................$400,000
Marketable securities........... 115,000
Accounts receivable ..............800,000
Inventory ................................950,000
Accounts payable ..................575,000
Accrued expenses .................180,000
Long-term debt ......................900,000
Cost of goods sold .................1,000,000
Required:
Assume the accounts payable balance is all trade payables and opening and closing balances are the same. Round your answers to two decimal places.
1. What is its current ratio?
2. What is its quick ratio?
3. What is its cash ratio?
4. What is the trade payable turnover ratio?
5. Discuss JRL's liquidity using these ratios. JRL’s current ratio depends on how liquid JRL's _____?_____ (accounts receivable and accounts payable/cash and marketable securities/inventory and accounts receivable) are. If the ______?______ (inventory/long-term debt/marketable securities) is slow moving, then the quick ratio may be a better indicator of liquidity. If accounts receivable may be difficult to collect, the ______?______ (cash ratio/current ratio/quick ratio) is best indicator of liquidity.
Expert Answer:
1 Answer Calculation of Current Ratio Current Ratio Current Assets Current Liabilities Current a... View the full answer
