Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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
2013 2012 2011
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)
ASSETS December 31,
2013 2012
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 2012 and 2013 assuming operating cash flows are $281 million and $460 million, respectively. Round your answers to two decimal places.

2013 2012
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?

Select current ratio, quick ratio, cash ratio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Quickstudy Reference Tool

Authors: Michael P Griffin

1st Edition

1423236408, 978-1423236405

More Books

Students also viewed these Accounting questions