Answered

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Use the following information to answer this question.

Windswept, Inc. 2017 Income Statement ($ in millions)

Net sales $9,390
Cost of goods sold 7,660
Depreciation 455
Earnings before interest and taxes $1,275
Interest paid 100
Taxable income $1,175
Taxes 411
Net income $764

Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions)

2016 2017 2016 2017
Cash $210 $240 Accounts payable $1,290 $1,335
Accounts rec. 960 860 Long-term debt 1,080 1,280
Inventory 1,750 1,665 Common stock 3,300 3,190
Total $2,920 $2,765 Retained earnings 620 870
Net fixed assets 3,370 3,910 Total assets $6,290 $6,675


Required:
What is the quick ratio for 2017?

Sagot :

ayokenny2001

Answer:

0.82

Explanation:

Quick ratio is computed as

= Quick assets / Current liabilities

Quick assets = cash and cash equivalents + marketable securities + Account receivables

Current liabilities = Bills payable + Accounts payable + Other short term payable

With regards to the above,

Quick assets given = Cash and accounts receivables ; account payables only for current liabilities

Quick ratio = $240 + $860 / $1,335

Quick ratio = $1,100 / $1,335

Quick ratio = 0.82

So, quick ratio for 2017 is 0.82

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