The data of Franklin Brothers Corp.for two years are given below.

Based on the above information,which of the following statements is true?

Question

The data of Franklin Brothers Corp.for two years are given below.

Based on the above information,which of the following statements is true?

Quizplus · Accepted Answer

D)Calculation of cash ratios:
Cash Ratio = (Cash + Cash Equivalent)/ Total Current Liabilities
2017: Cash Ratio = $12,500 / $31,000 = 0.403
2016: Cash Ratio = $5,300 / $22,000 = 0.241
A higher cash ratio is usually considered favorable as the company is said to be in a better position to pay off its current liabilities.

The Data of Franklin Brothers Corp