Quick Ratio (in millions) Smith and Sons, Inc. Balance Sheet (in millions) Calcu

Question

Quick Ratio

(in millions)

Smith and Sons, Inc.

Balance Sheet

(in millions)

Calculate the quick ratio for Smith & Sons, Inc., for 2015 and 2016.
Round answers to two decimal places.

Smith and Sons, Inc.
Income Statement

(in millions)

2016 2015 Net sales 10,200 9,700 Cost of goods sold (5,500) (5,200) Gross profit 4,700 4,500 Selling and administrative expenses (2,800) (2,700) Income from operations 1,900 1,800 Interest expense (300) (250) Income before income taxes 1,600 1,550 Income tax expense (420) (400) Net income 1,180 1,150

Explanation / Answer

Quick ratio = (Cash & cash equivalents+ account receivable)/current liabilities 2015 = (550+800)/3050 0.44 2016 = (350+900)/3,150 0.40

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