Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute t
ID: 2457256 • Letter: R
Question
Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the following liquidity ratios for 2013 and 2012. Round current ratio to two decimal places, and other ratios to four decimal places.
2013 2012
Current Ratio ______ ________
Quick Ratio ________ ________
Cash Ratio ________ _________
1,142
Gibraltar, Inc. Partial Balance Sheet (in millions) Assets (in order of liquidity): Dec. 31, 2013 Dec. 31, 2012 Cash $1,780 $1,649 Marketable securities 1,000 750 Accounts receivable 2,644 2,700 Inventories 3,010 2,950 Prepaid rent 500 500 Supplies 494 76 Total Current Assets 9,428 8,625 Liabilities (in order of magnitude): Long-term debt 14,465 15,001 Other non-current liabilities 4,421 3,148 Long-term income taxes payable 3,504 3,543 Accounts payable 2,556 2,468 Other current liabilities 2,066 1,738 Accrued compensation and benefits 1,538 1,082 Short-term borrowing 1,200 1,126 Estimated warranty liability 793 928 Income taxes payable 6581,142
Explanation / Answer
Dec 31,2013 Dec 31,2012
Current ratio= Current assets /current liabilities $9428 / $8821 $8625 / $8484
=1.07 = 1.02
Current Assets = $9428 $8625
Current Liabilities =
Accounts payable $2556 $2468
Other current liabilities 2066 1738
Accrued compensation and benefits 1538 1082
Short-term borrowing 1200 1126
Estimated warranty liability 793 928
Income tax payable 658 1142
----------- ---------
Total current liabilities 8821 8484
Quick ratio -Dec 31,2013
= current asset- inventories and prepaid expenses / current liabilities - short term borrowings.
= $9428 - $3010- $500 / $8821-$1200
=$5918 / $7621
= 0.7765
Quick ratio -Dec 31,2012
=current asset- inventories and prepaid expenses / current liabilities - short term borrowings.
=$8625-$2950-$500/ $8484 -$1126
=$5175 / $7358
= 0.7033
Cash ratio
Dec 31,2013
=Cash + Marketable securities / current liabilities - short term borrowings
=$1780 + $1000 / $8821-$1200
=$2780 / $7621
=0.3648
Cash ratio
Dec 31,2012
= Cash + Marketable securities / current liabilities-short term borrowings
= $1649 +$750 / $8484 - $1126
=$2399 / $7358
= 0.3260
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