You are evaluating the balance sheet for PattyCake’s Corporation. From the balan

Question

You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $260,000; accounts receivable = $1,400,000; inventory = $2,300,000; accrued wages and taxes = $600,000; accounts payable = $900,000; and notes payable = $800,000.

Calculate PattyCakes’ current ratio. (Round your answer to 2 decimal places.)

Current ratio   times

Calculate PattyCakes’ quick ratio. (Round your answer to 2 decimal places.)

Quick ratio   times

Calculate PattyCakes’ cash ratio. (Round your answer to 2 decimal places.)

Cash ratio   times

Explanation / Answer

Current ratio = (cash and marketable securities + accounts receivable + inventory) / (accrued wages and taxes + accounts payable + notes payable)

= ($260,000 + $1,400,000 + $2,300,000) / ($600,000 + $900,000 + $800,000)

= 1.72 times

Quick ratio = (cash and marketable securities + accounts receivable) / (accrued wages and taxes + accounts payable + notes payable)

= ($260,000 + $1,400,000) / ($600,000 + $900,000 + $800,000)

= 0.72 times

Cash ratio = cash and marketable securities / (accrued wages and taxes + accounts payable + notes payable)

= $260,000 / ($600,000 + $900,000 + $800,000)

= 0.11 times

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