Quick Ratio/ Acid test ratio: Acid test ration is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows: A c i d t e s t r a t i o = ( C a s h + C a s h e q u i v a l e n t s + S h o r t t e r m i n v e s t m e n t s + A c c o u n t s r e c e i v a b l e s ) C u r r e n t L i a b i l i t i e s Cash ratio: Cash ratio is calculated by dividing and cash and cash equivalents by the total current liabilities. The formula for Cash ratio is as follows: Cash Ratio = Cash and cash equivalents/ Current liabilities To calculate: The Quick and Cash ratio of Under Armour and Columbia Sportswear for the year 2016 and 2015.

Question

1. Compute the following ratios for the comparative periods (2018 and 2019). The company used 365 days in its computation for some of the ratios. Show your solution. d. Accounts Receivable Turnover Ratio e. Average Collection Period f. Inventory Turnover Ratio g. Average Days in Inventory h. Number of days in Operating Cycle i. Debt to Total Assets Ratio j. Debt to Equity Ratio k. Times Interest Earned Ratio l. Gross Profit Ratio m. Profit Margin Ratio n. Return on Assets o. Return on Equity p. Assets Turnover Ratio

Answer 1

Question

Chapter 8, Problem 84.5C

To determine

Concept introduction:

Quick Ratio/ Acid test ratio:

Acid test ration is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows:

Acid test ratio = (Cash + Cash equivalents + Short term investments + Accounts receivables) Current Liabilities

Cash ratio:

Cash ratio is calculated by dividing and cash and cash equivalents by the total current liabilities. The formula for Cash ratio is as follows:

Cash Ratio = Cash and cash equivalents/ Current liabilities

To calculate:

The Quick and Cash ratio of Under Armour and Columbia Sportswear for the year 2016 and 2015.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

1. Compute the following ratios for the comparative periods (2018 and 2019). The company used 365 days in its computation for some of the ratios. Show your solution. d. Accounts Receivable Turnover Ratio e. Average Collection Period f. Inventory Turnover Ratio g. Average Days in Inventory h. Number of days in Operating Cycle i. Debt to Total Assets Ratio j. Debt to Equity Ratio k. Times Interest Earned Ratio l. Gross Profit Ratio m. Profit Margin Ratio n. Return on Assets o. Return on Equity p. Assets Turnover Ratio

Selected comparative financial statements of Zayed Abu Dhabi Corporation follow. Zayed Abu Dhabi Corporation Comparative Balance Sheets For the years ended December 31, 2017-2020 2020 2019 2018 2017 Cash 58 82 78 84 Accounts recble., net 466 490 514 360 Merchandise inventory 1802 1190 1332 998 Plant assets, net 2020 1752 2014 944 Total assets 4442 4002 3518 2600 Required: Compute trend percentage (to one decimal) for each year using 2017 as the base year. Answer Zayed Abu Dhabi Corporation Comparative Balance Sheets For the years ended December 31, 2017-2020 2020 2019 2018 2017 Cash Accounts recble., net Merchandise inventory Plant assets, net Total assets

Access the February 21, 2017, filing of the December 31, 2016, 10-K report of The Hershey Company (ticker: HSY) at SEC.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its years ending December 31, 2016, and December 31, 2015. Interpret its profitability using the results obtained for these two years. 1. Profit margin ratio (round the percent to one decimal). 2. Gross profit ratio (round the percent to one decimal). 3. Return on total assets (round the percent to one decimal). (Total assets at year-end 2014 were $5,622,870 in thousands.) 4. Return on common stockholders’ equity (round the percent to one decimal). (Total shareholders’ equity at year-end 2014 was $1,519,530 in thousands.) 5. Basic net income per common share (round to the nearest cent).