Liquidity Ratios Balance Sheet Ratios Current Current Assets Liquidity Ratios Current Liabilities Shows a firms For Basket wonders ability to cover its December 31. 19x3 current liabilities with its current 1,195=239 $500 assets 6-16
6-16 Liquidity Ratios Current Current Assets Current Liabilities For Basket Wonders December 31, 19X3 Shows a firm‘s ability to cover its current liabilities with its current assets. Balance Sheet Ratios Liquidity Ratios $1,195 $500 = 2.39
Liquidity Ratio Comparisons Current Ratio Year BW Industry 19X3 239 2.15 19X2 2.26 2.09 19X1 191 2.01 Ratio is stronger than the industry average 6-17
6-17 Liquidity Ratio Comparisons BW Industry 2.39 2.15 2.26 2.09 1.91 2.01 Year 19X3 19X2 19X1 Current Ratio Ratio is stronger than the industry average
Liquidity Ratios Balance Sheet Ratios Acid-Test(Quick Current Assets Iny Liquidity Ratios Current Liabilities Shows a firms For Basket wonders ability to meet December 31. 19x3 current liabilities $1,195-$696 with its most liquid =1.00 $500 assets 6-18
6-18 Liquidity Ratios Acid-Test (Quick) Current Assets - Inv Current Liabilities For Basket Wonders December 31, 19X3 Shows a firm‘s ability to meet current liabilities with its most liquid assets. Balance Sheet Ratios Liquidity Ratios $1,195 - $696 $500 = 1.00
Liquidity Ratio Comparisons AcidTest Ratio Year BW Industry 19X3 1.00 125 19X2 1.04 123 19X1 111 125 Ratio is weaker than the industry average. 6-19
6-19 Liquidity Ratio Comparisons BW Industry 1.00 1.25 1.04 1.23 1.11 1.25 Year 19X3 19X2 19X1 Acid-Test Ratio Ratio is weaker than the industry average
Summary of the Liquidity Ratio Comparisons Ratio BW Industry Current 2.39 2.15 Acid-Test1, 00 125 n Strong current ratio and weak acid-test ratio indicates a potential problem in the inventories account o Note that this industry has a relatively high level of inventories 6-20
6-20 Summary of the Liquidity Ratio Comparisons Strong current ratio and weak acid-test ratio indicates a potential problem in the inventories account. Note that this industry has a relatively high level of inventories. Ratio BW Industry Current 2.39 2.15 Acid-Test1.00 1.25