Question

In December 2015, Apple had cash of $37.87 billion, current assets of 575.96 billion, and current liabilities of 575 93 billion. It also had inventories of 245 billion a. What was Apple's current ratio? b. What was Apple's quick ratio? c. In January 2016, Hewlett-Packard had a quick ratio of 0 66 and a current ratio of 0.90. What can you say about the asset liquidity of Apple relative to Hewlett-Packard?

Answer 1

a)
Apple's current ratio = Current assets / Current liabilities
= $75.96 billion / $75.93 billion
= 1.0003951 or 1.00 times (rounded)

b)
Apple's quick ratio = (Current assets - Inventory) / Current liabilities
= ($75.96 billion - $2.45 billion) / $75.93 billion
= 0.9681 times or 0.97 times(rounded).

c)
Hewlett-Packard had quick ratio of 0.66 and current ratio of 0.90. Apple's quick ratio is 0.97 and current ratio of 1. Apple has very good financial background and it is performing very well in terms of current ratio and in terms of liquidity ratio. Apple can easily manage their day to day activities and easily pay current liabilities because it has high liquidity.

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