Module 5: Sprdsht #4

Liquidity ratioJosh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows:

Account	Amount
Cash	$3,230
Marketable securities	1,060
Checking account	840
Credit card payables	1,280
Short-term notes payable	1160

(round to 2 decimal places)

a. Calculate Josh's liquidity ratio.

b. Several of Josh's friends have told him that they have liquidity ratios of about 1.6. How would you analyze Josh's liquidity relative to his friends?