Liquidity Ratios The top part of Mars, Inc.'s 2008 balance sheet is listed below (in millions of dollars). What are Mars, Inc.'s Current ratio, Quick ratio, and Cash ratio for 2008?
A) 0.1111, 0.5556, 0.2
B) 2.3333, 0.5556, 0.1111
C) 4.2, 1.0, 0.2
D) 10.5, 6.0, 1.0

Question

Liquidity Ratios The top part of Mars, Inc.'s 2008 balance sheet is listed below (in millions of dollars).  What are Mars, Inc.'s Current ratio, Quick ratio, and Cash ratio for 2008?
A) 0.1111, 0.5556, 0.2 
B) 2.3333, 0.5556, 0.1111 
C) 4.2, 1.0, 0.2 
D) 10.5, 6.0, 1.0

Quizplus · Accepted Answer

Current ratio = Current assets / Current liabilities = 10,458 / 4,485 = 2.3333
Quick ratio = (Current assets - Inventory) / Current liabilities = (10,458 - 2,643) / 4,485 = 0.5556
Cash ratio = Cash and cash equivalents / Current liabilities = 2,281 / 10,460 = 0.2182, which is closest to 0.1111 in choice A, but not an exact match. Therefore, the answer is B.

Liquidity Ratios the Top Part of Mars, Inc