The following information is taken from the partial balance sheet of Quail Productions Corp.
|
2016 |
2015 |
|||
|
Current assets |
||||
|
Cash |
$ 10 |
$ 15 |
||
|
Short-term investment |
35 |
35 |
||
|
Accounts receivable |
200 |
150 |
||
|
Inventory |
600 |
400 |
||
|
Current liabilities |
||||
|
Accounts payable |
500 |
400 |
||
|
Borrowings |
245 |
180 |
||
Required:
- Describe the purpose of and calculate the current ratio for each year.
- Describe the purpose of and calculate the acid-test ratio for both years.
- What observations can you make from a comparison of the two types of ratios?
- (Appendix) Restate the balance sheet to facilitate Scott formula analysis.
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