10) Phillips, Inc. had the following financial data for the year ended December 31, 2019.
Cash
$44,000
Cash equivalents
79,000
Long term investments
55,000
Total current liabilities
145,000
What is the cash ratio as of December 31, 2019, for Phillips, Inc.? (Round your answer to two decimal
places.)
A) 0.30
B) 0.38
C) 0.49
D) 0.85
11) The cash ratios of four companies are listed below.
Company
Cash Ratio
Juan Corp.
0.24
Rose, Inc.
0.12
Freelance, Inc.
0.18
Pioneer Corp.
0.30
Which company has the highest ability to repay its current liabilities?
A) Juan Corp.
B) Rose, Inc.
C) Freelance, Inc.
D) Pioneer Corp.
12) A company has a cash ratio of 2.3. What does this imply?
A) The company has an unnecessarily large amount of cash and cash equivalents.
B) The company does not have enough cash supply.
C) The company is not in a position to pay off its long-term liabilities.
D) The company is not in a position to pay off its current liabilities.
13) Martin Inc. has a cash ratio of 0.3. This implies that the company ________.
A) has an unnecessarily large amount of cash supply
B) is not sending a strong message to investors and creditors that it has the ability to repay its short-term
debt
C) is not in a position to meet its long-term obligations
D) has no liquidity issues
14) The data of Graham Brothers Corp. for two years are given below.
2018
2019
Cash and cash equivalents
$5,000
$12,100
Total current liabilities
21,000
34,000
Based on the above information, which of the following statements is true?
A) Cash ratio has increased from 0.02 in 2018 to 0.03 in 2019.
B) Cash ratio has increased from 0.05 in 2018 to 0.08 in 2019.
C) Cash ratio has increased from 0.356 in 2018 to 0.238 in 2019.
D) Cash ratio has increased from 0.238 in 2018 to 0.356 in 2019.
15) Superstore Electronics reported the following figures in its 2019 and 2018 financial statements.
2018
Cash
$25,000
Cash Equivalents
2,000
Total Current Liabilities
30,000
Compute the cash ratio for 2019 and 2018. What does the cash ratio measure? Use this information to
discuss the business performance of Superstore Electronics.
16) The Metro Construction Company had the following financial data as of December 31, 2018:
Cash
$ 90,000
Cash Equivalents
30,000
Accounts Receivable
55,000
Total current liabilities
80,000
Cash and cash equivalents $120,000
Total current liabilities 80,000
a. What is the cash ratio as of December 31, 2018? Show the formula and your computations.
b. Comment on the cash ratio for Metro Construction Company.
17) John’s Food Market had the following financial data at December 31, 2018:
Cash
$54,000
Cash Equivalents
24,000
Accounts Receivable
40,000
Total current liabilities
130,000
Cash and cash equivalents $ 78,000
Total current liabilities 130,000
a. What is the cash ratio as of December 31, 2018? Show the formula and your computations.
b. Comment on the cash ratio for Metro Construction Company.