Homework SourseQuick Ratio in millions Smith and Sons Inc Balance Sheet in
Quick Ratio
(in millions)
Smith and Sons, Inc.
Balance Sheet
(in millions)
Calculate the quick ratio for Smith & Sons, Inc., for 2015 and 2016.
Round answers to two decimal places.
| Smith and Sons, Inc. Income Statement | ||
|---|---|---|
| (in millions) | 2016 | 2015 |
| Net sales | 10,200 | 9,700 |
| Cost of goods sold | (5,500) | (5,200) |
| Gross profit | 4,700 | 4,500 |
| Selling and administrative expenses | (2,800) | (2,700) |
| Income from operations | 1,900 | 1,800 |
| Interest expense | (300) | (250) |
| Income before income taxes | 1,600 | 1,550 |
| Income tax expense | (420) | (400) |
| Net income | 1,180 | 1,150 |
Solution
Quick ratio = (Cash & cash equivalents+ account receivable)/current liabilities 2015 = (550+800)/3050 0.44 2016 = (350+900)/3,150 0.40
