Liquidity Ratios You are evaluating the balance sheet for Blue Jays Corporation.From the balance sheet you find the following balances: cash and marketable securities = $200,000,accounts receivable = $800,000,inventory = $1,000,000,accrued wages and taxes = $250,000,accounts payable = $400,000,and notes payable = $300,000.What are Blue Jays' current ratio,quick ratio,and cash ratio,respectively?
A)1.05263, 1.05263, 0.21053
B)2.10526, 1.05263, 0.21053
C)3.07692, 1.53846, 0.30769
D)3.07692, 1.05263, 0.30769

Question

Quizplus · Accepted Answer

The current ratio is calculated as (cash + marketable securities + accounts receivable + inventory) / (accrued wages and taxes + accounts payable + notes payable) = ($200,000 + $800,000 + $1,000,000) / ($250,000 + $400,000 + $300,000) = 2.10526. The quick ratio is (cash + marketable securities + accounts receivable) / (accrued wages and taxes + accounts payable + notes payable) = ($200,000 + $800,000) / ($250,000 + $400,000 + $300,000) = 1.05263. The cash ratio is (cash + marketable securities) / (accrued wages and taxes + accounts payable + notes payable) = $200,000 / ($250,000 + $400,000 + $300,000) = 0.21053.

Liquidity Ratios You Are Evaluating the Balance Sheet for Blue