Sherwood, Inc., the parent company of Frito-Lay snack foods and Sherwood 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	$2,138		$2,238
Short-term investments, at cost	1,519		4,157
Accounts and notes receivable, net	4,827		4,264
Inventories	2,651		2,829
Prepaid expenses and other current assets	884		1,047
Short-term obligations	283		3,004
Accounts payable	6,787		6,686

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	fill in the blank 1	fill in the blank 2
2. Quick ratio	fill in the blank 3	fill in the blank 4

b. The liquidity of Sherwood has

increaseddecreasedremained constant

some over this time period. Both the current and quick ratios have

increaseddecreasedremained constant

. Sherwood is a

strongweak

company with

ampleinsufficient

resources for meeting short-term obligations. Its liquidity as measured by the current and quick ratios has

improveddeterioratedremained constant

during this period.