Question

At the end of 2017​, Apple had cash and​ short-term investments of $ 74.48 ​billion, accounts receivable of $ 17.58 ​billion, current assets of $ 128.78 ​billion, and current liabilities of $ 101.27 billion. a. What was​ Apple's current​ ratio? b. What was​ Apple's quick​ ratio? c. What was​ Apple's cash​ ratio? d. At the end of 2017​, HPQ had a cash ratio of 0.33​, a quick ratio of 0.54 and a current ratio of 0.96. What can you say about the asset liquidity of Apple relative to​ HPQ?

Answer 1

Answer:

a. Apple current ratio =  Current asset / Current liabilities

                                    =   $128.78billion/ $101.27billion

                                     = 1.27

b Apple Quick ratio    =  (Current asset - Inventory ) / Current liabilities

                                     = ( $74.48billion + $17.58billion)/ $101.27billion

                                     =  $92.06billion/$101.27billion

                                     =  0.91

c. Apple Cash ratio   = cash and short-term investment / current liabilities

                                   =  $74.48billion / $101.27billion

                                  =   0.77

d. By comparing the computed ratios of Apple and HPQ, it shows that Apple asset liquidity is better than that of HPQ.  The current ratio of Apple is 1.27 as against 0.96 for HPQ. also in term of Quick ratio, Apple has 0.91 while HPQ has 0.54.  The cash ratio of HPQ is 0.33 while Apple figure stood at 0.77

Explanation: