Question#1 - Financial and Management
Accounting
Gigantic Products extracted from the company's balance sheet as at 30 June 2015 with the following:
Industry average:
Current ratio = 2.3: 1
Quick ratio = 1.3: 1
Required:
1a. Calculate the following as at 30 June 2015 (round to the nearest 2 decimal places):
(i) Quick assets
(ii) Current assets
(iii) Current liabilities
(iv) Current ratio
(v) Quick ratio
1b. Based upon your answer in 1a, comment Gigantic Products' performance against the industry average.
1c. Suggest one (1) action Gigantic Products can take to improve the company's current ratio.
Gigantic Products extracted from the company's balance sheet as at 30 June 2015 with the following:
| Cash and cash equivalents | $620,000 |
| Investments in marketable securities | $300,000 |
| Receivables | $1,400,000 |
| Inventories | $1,100,000 |
| Prepaid expense and other current assets | $450,000 |
| Plant and equipment | $3,300,000 |
| Accounts payable | $1,600,000 |
| Bank loans payable within one year | $300,000 |
| Income taxes payable | $300,000 |
| Retained earnings | $1,700,000 |
Current ratio = 2.3: 1
Quick ratio = 1.3: 1
Required:
1a. Calculate the following as at 30 June 2015 (round to the nearest 2 decimal places):
(i) Quick assets
(ii) Current assets
(iii) Current liabilities
(iv) Current ratio
(v) Quick ratio
1b. Based upon your answer in 1a, comment Gigantic Products' performance against the industry average.
1c. Suggest one (1) action Gigantic Products can take to improve the company's current ratio.
