Question
Quick Ratio Calculate the quick ration for Smith & Sons Inc for 2015 and 2016 and comment on the companys working capital position. Did the
Quick Ratio
Calculate the quick ration for Smith & Sons Inc for 2015 and 2016 and comment on the companys working capital position. Did the companys ability to pay its current liabilities improve over the two years?
Quick ratio = (cash and cash equivalents + Short term investments + Accounts receivable)/Current Liabilities
| Smith & Sons, Inc | ||||
| Balance Sheet | ||||
| Decemober 31, 2016 and 2015 | ||||
| (In millions) | 2016 | 2015 | ||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 200 | 400 | ||
| Accounts receivable | 900 | 800 | ||
| Inventory | 500 | 650 | ||
| Other Current assets | 400 | 250 | ||
| Total Current assets | 2000 | 2100 | ||
| Property, plant & equipment (net) | 2,600 | 2,500 | ||
| Other Assets | 5,700 | 5,900 | ||
| Total assets | 10,300 | 10,500 | ||
| Labilities and Stockholders'e Equity | ||||
| Current Liabilites | 3,000 | 2,900 | ||
| Long-term liabilities | 5,000 | 5,400 | ||
| Total Labilities | 8,000 | 8,300 | ||
| Stockholders's equity-common | 2,300 | 2,200 | ||
| Total Labilities and Stockholders' Equity | 10,300 | 10,500 | ||
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CIA Review Part 2 Internal Audit Practice For The New 3 Part Exam
Authors: Irvin N.Gleim
17th Edition
158194375X, 978-1581943757
