Year end balance sheet data (shown in thousands of dollars) for Mama Mia Soup Company follow Required (a) Explain the signi iuml not cance of the quick ratio How do decision makers use this ratio when interpreting a companys iuml not nancial statements (b) Compute Mama Mias quick ratio for both yea...

a The quick ratio measures the liquidity of an organization and indicates ...

Year-end balance sheet data (shown in thousands of dollars) for Mama Mia Soup Company follow. Required: (a)

Question:

Year-end data (shown in thousands of dollars) for Mama Mia Soup Company follow.

Year-end balance sheet data (shown in thousands of dollars) for

Required:
(a) Explain the signiï¬cance of the quick ratio. How do decision makers use this ratio when interpreting a company€™s ï¬nancial statements?
(b) Compute Mama Mia€™s quick ratio for both years. Based strictly on these ratios, in which year was the company€™s liquidity position stronger?
(c) If the average quick ratio in Mama Mia€™s industry is 1.2, is the company€™s quick ratio better or worse than the industry norm?
(d) Identify at least three factors that could account for Mama Mia€™s quick ratio being signiï¬cantly different from the industry norm.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...