Liquidity ratio Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows: Account Amount Cash $3,170 Marketable securities 910 Checking account Credit card payables Short-term notes payable 750 1,270 870 a. Calculate Josh's liquidity ratio. b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends? a. Josh's liquidity ratio is. (Round to two decimal places.) b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends? (Select all the answers that apply.) O A. Josh's ratio indicates that he is in a relatively better position to satisfy his future short-term debt obligations as they come due. O B. Josh's ratio indicates that he is in a relatively inferior position to satisfy his existing short-term debt obligations as they come due. O C. Since Josh's liquidity ratio exceeds 1.7, Josh has less liquidity than his friends. O D. Since Josh's liquidity ratio exceeds 1.7, Josh has more liquidity than his friends.
Liquidity ratio Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows: Account Amount Cash $3,170 Marketable securities 910 Checking account Credit card payables Short-term notes payable 750 1,270 870 a. Calculate Josh's liquidity ratio. b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends? a. Josh's liquidity ratio is. (Round to two decimal places.) b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends? (Select all the answers that apply.) O A. Josh's ratio indicates that he is in a relatively better position to satisfy his future short-term debt obligations as they come due. O B. Josh's ratio indicates that he is in a relatively inferior position to satisfy his existing short-term debt obligations as they come due. O C. Since Josh's liquidity ratio exceeds 1.7, Josh has less liquidity than his friends. O D. Since Josh's liquidity ratio exceeds 1.7, Josh has more liquidity than his friends.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Liquidity ratio Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows:
Account
Amount
S3,170
Cash
Marketable securities
910
Checking account
Credit card payables
Short-term notes payable
750
1,270
870
a. Calculate Josh's liquidity ratio.
b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends?
a. Josh's liquidity ratio is. (Round to two decimal places.)
b. Several of Josh's friends have told him that they have liquidity ratios of about 1.7. How would you analyze Josh's liquidity relative to his friends? (Select all the answers that apply.)
O A. Josh's ratio indicates that he is in a relatively better position to satisfy
future short-term debt obligations as they come due.
O B. Josh's ratio indicates that he is in a relatively inferior position to satisfy his existing short-term debt obligations as they come due.
O C. Since Josh's liquidity ratio exceeds 1.7, Josh has less liquidity than his friends.
O D. Since Josh's liquidity ratio exceeds 1.7, Josh has more liquidity than his friends.
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