Homework Answers
Current ratio is computed by using the below formula:
= Current Assets / Current Liabilities
So the current ratio of 2001 will be
= $ 243 / $ 177
= 1.37 Approximately
The current ratio of 2002 will be
= $ 316 / $ 219
= 1.44 Approximately
The current ratio of 2003 will be
= $ 503 / $ 368
= 1.37 Approximately
Quick ratio is computed by using the below formula:
= ( Current Assets - Inventory ) / Current Liabilities
So the quick ratio of 2001 will be
= ( $ 243 - $ 173 ) / $ 177
= 0.40 Approximately
The quick ratio of 2002 will be
= ( $ 316 - $ 210 ) / $ 219
= 0.48 Approximately
The quick ratio of 2003 will be
= ( $ 503 - $ 317 ) / $ 368
= 0.51 Approximately
So as can be seen from the above analysis, the correct answer will be option of the liquidity indicators show slight fluctuations but are relatively stable over the three year period.
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