Exercise 12-78 Short-Term Liquidity Ratios The financial statements for Seek Enterprises, a retailer, follow. Seek Enterprises 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 Seek Enterprises 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 1 CDOOR COTTOM LUCK 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 $483 million, respectively. Round your answers to two decimal places. 2019 2018 Current ratio 1.47 1.49 Quick ratio 0.60 0.55 Cash ratio 0.10 0.04 Operating cash flow ratio 0.08 x 0.19 x 2. Conceptual Connection: Indicate which ratio appears to be most appropriate for a retail organization? quick ratio Feedback Check My Work 1. Current ratio measures the proportion of current assets current liabilities