1. Exercise 12-78 (Algorithmic) Short-Term Liquidity Ratios

   The financial statements for Giardi Corporation, a retailer, follow.

   Giardi Corporation
   Consolidated Income Statements
   (Millions of dollars, except per share data)
   		December 31
   		2019		2018		2017
   Revenues		$19,233		$17,927		$16,115
   Costs and expenses:
   Cost of retail sales, buying, and occupancy		$14,164		$13,129		$11,751
   Selling, publicity, and administration		3,175		2,978		2,801
   Depreciation		498		459		410
   Interest expense, net		446		437		398
   Taxes other than income taxes		343		313		283
   Total costs and expenses		$18,626		$17,316		$15,643
   Earnings before income taxes		$607		$611		$472
   Provision for income taxes		232		228		171
   Net earnings		$375		$383		$301

   Giardi Corporation
   Consolidated Balance Sheets
   (Millions of dollars)
   		December 31,
   		2019		2018
   ASSETS
   Current assets:
   Cash and cash equivalents		$321		$117
   Accounts receivable		1,536		1,514
   Merchandise inventories		2,497		2,618
   Other		157		165
   Total current assets		$4,511		$4,414
   Property and equipment:
   Land		$1,120		$998
   Buildings and improvements		4,753		4,342
   Fixtures and equipment		2,162		2,197
   Construction-in-progress		248		223
   Accumulated depreciation		(2,336)		(2,197)
   Net property and equipment		$5,947		$5,563
   Other		320		360
   Total assets		$10,778		$10,337
   LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
   Notes payable		$200		$23
   Accounts payable		1,654		1,596
   Accrued liabilities		903		849
   Income taxes payable		145		125
   Current portion of long-term debt		173		371
   Total current liabilities		$3,075		$2,964
   Long-term debt		4,279		4,330
   Deferred income taxes and other		536		450
   Loan to ESOP		(217)		(267)
   Total liabilities		$7,673		$7,477
   Stockholders' equity:
   Preferred stock		$368		$374
   Common stock		72		71
   Additional paid-in capital - common		73		58
   Retained earnings		2,592		2,357
   Total stockholders' equity		$3,105		$2,860
   Total liabilities and stockholders' equity		$10,778		$10,337

   Required:

   1. Compute the four short-term liquidity ratios for 2018 and 2019 assuming operating cash flows are $281 million and $440 million, respectively. Round your answers to two decimal places.

   	2019	2018
   Current ratio
   Quick ratio
   Cash ratio
   Operating cash flow ratio

   2. Conceptual Connection: Indicate which ratio appears to be most appropriate for a retail organization?

   • current ratio
   • quick ratio
   • cash ratio