Galaxy United, Inc. 2009 Income Statement ($ in millions) Net sales $8,500 Less:
ID: 2745196 • Letter: G
Question
Galaxy United, Inc.
2009 Income Statement
($ in millions)
Net sales $8,500
Less: Cost of goods sold 7,190
Less: Depreciation 420
Earnings before interest and taxes 890
Less: Interest paid 80
Taxable Income 810
Less: Taxes 284
Net income $ 527
2008
2009
2008
2009
1,480
1,520
510
736
3,190
3,630
$5,730
$6,080
$5,730
$6,080
What is the quick ratio for 2009?
2008 and 2009 Balance Sheets
($ in millions)
2008
2009
2008
2009
Cash $ 120 $ 150 Accounts payable $1,110 $1,150 Accounts rec. 940 780 Long-term debt 960 1,244 Inventory1,480
1,520
Common stock $3,150 $2,950 Sub-total $2,540 $2,450 Retained earnings510
736
Net fixed assets3,190
3,630
Total assets$5,730
$6,080
Total liab. & equity$5,730
$6,080
Explanation / Answer
Quick Ratio = (current assets - inventory)/current liabilities
In this case:
Current assets = cash + accounts receivable + inventory
Current liabilities = accounts payable
Quick ratio in 2009 = (cash + accounts receivable)/accounts payable
= (150 + 780)/1150
= 0.808696
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