Current Position Analysis

Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current assets and current liabilities at the end of two recent years:

	Current Year (in millions)		Previous Year (in millions)
Cash and cash equivalents	$4,699		$5,111
Short-term investments, at cost	3,338		9,493
Accounts and notes receivable, net	10,611		9,736
Inventories	1,998		1,777
Prepaid expenses and other current assets	666		657
Short-term obligations	355		3,773
Accounts payable	8,525		8,397

a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

	Current Year	Previous Year
1. Current ratio
2. Quick ratio

b. The liquidity of Sherwood has increased some over this time period. Both the current and quick ratios have increased . Sherwood is a strong company with ample resources for meeting short-term obligations. Its liquidity as measured by the current and quick ratios has improved during this period.