Sherwood, Inc., the parent company of Frito-Lay snack foods and Sherwood beverages, had the following current assets and current liabilities at the end of two recent years:Line Item DescriptionCurrent Year(in millions)Previous Year(in millions)Cash and cash equivalents$4,611 $4,986 Short-term investments, at cost3,275 9,259 Accounts and notes receivable, net10,411 9,497 Inventories1,445 963 Prepaid expenses and other current assets481 356 Short-term obligations385 4,089 Accounts payable9,245 9,101 a. Determine the (1) current ratio and (2) quick ratio for both years. Round your answers to one decimal place.Line Item DescriptionCurrent YearPrevious Year1. Current ratio??2. Quick ratio?? slightly over this time period. Both the current and quick ratios have fill in the blank 2 of 4 . Sherwood is a fill in the blank 3 of 4 company with fill in the blank 4 of 4 resources for meeting short-term obligations.

Answered: Sherwood, Inc., the parent company of…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

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Sherwood, Inc., the parent company of Frito-Lay snack foods and Sherwood beverages, had the following current assets and current liabilities at the end of two recent years:

Line Item Description	Current Year (in millions)	Previous Year (in millions)
Cash and cash equivalents	$4,611	$4,986
Short-term investments, at cost	3,275	9,259
Accounts and notes receivable, net	10,411	9,497
Inventories	1,445	963
Prepaid expenses and other current assets	481	356
Short-term obligations	385	4,089
Accounts payable	9,245	9,101

a. Determine the (1) current ratio and (2) quick ratio for both years. Round your answers to one decimal place.

Line Item Description	Current Year	Previous Year
1. Current ratio	?	?
2. Quick ratio	?	?

slightly over this time period. Both the current and quick ratios have fill in the blank 2 of 4

. Sherwood is a fill in the blank 3 of 4

company with fill in the blank 4 of 4

resources for meeting short-term obligations.

Expert Solution

Step 1

The current ratio contrasts the total current assets and liabilities of the business organizations. In order to determine the current ratio, the current assets are required to be divided by the current liabilities.

The current ratio is computed by the business entities so that the investors are able to understanding about the capacity of the entity to pay off its current liabilities with its current assets.

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