Question

year 2024
requirement 1b. compute the cash ratios for 2025 and 2024
begin by selecting the formula to compute the cash ratio
cash ratio = (cash + cash equivalents) - total current liabilities
now, compute the cash ratios for 2025 and 2024 (round your answers to two decimal places, x.xx )
cash ratio
year 2025
year 2024
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balance sheet
cash $ 95,000 $ 93,000
accounts receivable, net 108,000 122,000 $ 98,000
merchandise inventory 147,000 158,000 205,000
prepaid expenses 21,000 6,000
total current assets 371,000 379,000
property, plant, and equipment, net 217,000 175,000
total assets $ 588,000 $ 654,000 $ 586,000
liabilities
total current liabilities $ 227,000 $ 245,000
long - term liabilities 119,000 98,000
total liabilities 346,000 343,000
stockholders equity
preferred stock, 5% 96,000 96,000
common stockholders equity, no par 146,000 112,000 $ 91,000
total liabilities and stockholders equity $ 588,000 $ 654,000

Explanation:

Step1: Identify values for 2025

Cash in 2025 is $95,000. Total Current Liabilities in 2025 is $227,000.
Cash ratio formula: $\text{Cash ratio} = \frac{\text{Cash}}{\text{Total Current Liabilities}}$
For 2025: $\frac{95000}{227000} \approx 0.42$

Step2: Identify values for 2024

Cash in 2024 is $93,000. Total Current Liabilities in 2024 is $245,000.
For 2024: $\frac{93000}{245000} \approx 0.38$

Answer:

Year 2025: 0.42
Year 2024: 0.38