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FinanceQ&A LibraryJosh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows:AccountAmmountCash3,210Marketable securities960Checking account790Credit card payables1,150Short-term notes payable1,140a. Calculate Josh's liquidity ratio.b. Several of Josh's friends have told him that they have liquidity ratios of about 1.5. How would you analyze Josh's liquidity relative to his friends?Question

Asked Sep 16, 2019

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Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows:

Account | Ammount |

Cash | 3,210 |

Marketable securities | 960 |

Checking account | 790 |

Credit card payables | 1,150 |

Short-term notes payable | 1,140 |

a. Calculate Josh's liquidity ratio.

b. Several of Josh's friends have told him that they have liquidity ratios of about 1.5. How would you analyze Josh's liquidity relative to his friends?

Step 1

**a)**

* ***Calculation of liquidity ratio:**

Josh's liquidity ratio is *2.17.*

**Excel spreadsheet:**

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