You are evaluating the balance sheet for Goodman\'s Bees Corporation From the ba

Question

You are evaluating the balance sheet for Goodman's Bees Corporation From the balance sheet you find the following balances cash and marketable securities = $420,000; accounts receivable = $1,160,000; inventory = $2,060,000 accrued wages and taxes = $480,000; accounts payable - $780,000, and notes payable $560,000. Calculate Goodman Bees' current ratio (Round your answer to 2 decimal places.) Calculate Goodman Bees quick ratio (Round your answer to 2 decimal places.) Calculate Goodman Bees' cash ratio (Round your answer to 2 decimal places.)

Explanation / Answer

Current Ratio= Current Assets/ Current Liabilities

                      =$420,000+$2,060,000+$1,160,000/$480,000+$780,000+$560,000

                      =$3,640,000/$1,820,000

                     =2 times

Quick Ratio= Quick Assets/ Current Liabilities

                    =$420,000+$1,160,000/$480,000+$780,000+$560,000

                      = $1,580,000 /$1,820,000

                   =0.87 times

Cash Ratio= Cash + Cash Equivalents / Current Liabilities

                  =$420,000/$480,000+$780,000+$560,000

                      = $420,000 /$1,820,000

                   =0.231times

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