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10 September, 01:46

Blackwell Automotive's balance sheet at the end of its most recent fiscal year shows the following information: Blackwell Automotive Balance Sheet as of March 31, 2013 Assets Liabilities and Equity Cash and marketable securities $18,940 Accounts payable and accruals $163,257 Accounts receivable 128,840 Notes payable 21,115 Inventories 228,937 Total current assets $376,717 Total current liabilities $184,372 Long-term debt 168,022 Total liabilities $352,394 Net plant and equipment 711,256 Common stock 313,299 Goodwill and other assets 89,879 Retained earnings 512,159 Total assets $1,177,852 Total liabilities and equity $1,177,852 In addition, it was reported that the firm had a net income of $412,000 on net sales of $4,240,000. a. What are the firm's current ratio and quick ratio? (Round answers to 2 decimal places, e. g. 15.25.) Current Ratio times Quick Ratio times

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  1. 10 September, 05:34
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    Current Ratio is 2.04 times

    Quick Ratio is 0.80 times

    Explanation:

    a. Current Ratio : The current ratio is that ratio which shows relationship between current assets and current liabilities. It is computed to check the liquidity of the firm.

    Current Ratio = Current Assets : Current Liabilities

    = $376,717 : $184,372

    = 2.04 times

    Thus, the current ratio is 2.04 times

    b. Quick Ratio : The Quick ratio is also check the liquidity of the company but while computing it does not include inventories.

    Quick Ratio = (Current Assets - Stock) : Current Liabilities

    = ($376,717 - $228,937) : $184,372

    = 0.80 times

    Thus, the quick ratio is 0.80 times
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