![]() We get the following financials from Paypal’s annual report.Ĭash Ratio = Cash + Cash equivalents / Current Liabilities Let us determine the cash ratio of Paypal Holdings for 2021. However, it also indicates that the company had better capital management. had a lower ratio than 0.5 (0.33) in 2022, signifying that the company had inadequate liquid cash to fulfill its total debt obligations. However, it also means the company had a poor capital management system. had a higher ratio than 0.5 in 2021, it could repay at least 0.51, i.e., 51% of its liabilities using cash and cash equivalents. A ratio of 0.5 or above is good.Ĭash Ratio = Cash + Cash Equivalents / Total current liabilitiesĬompute the cash ratio for both years and interpret the results using the following data for Step-up Ltd. It determines if the company can repay its short-term debt using cash, cash equivalents, or marketable securities. However, it can use other assets or sources to fulfill its debt obligations. We get the following financials from Amazon’s annual report.Īmazon Inc had a quick ratio of 0.91 in 2021, indicating that it has slightly lower liquidity and, thus, relatively lower chances of repaying debts using quick assets. Let us determine the quick ratio of Amazon Inc for 2021. had a lower ratio than 1 (0.7) in 2022, indicating the company had insufficient quick assets to repay its debt in that financial year. had a higher ratio than 1 (1.15) in 2021, it had enough liquid assets to fulfill its debt obligations. Quick ratio in 2022 = (Cash and Cash Equivalents + Marketable Securities + Accounts Receivables) / Current Liabilities Quick ratio in 2021 = (Current Assets – Inventories) / Current Liabilities using the following financial data for 20: Quick Ratio = (Current Assets – Inventories) / Current LiabilitiesĬalculate and interpret the quick ratio for Marks & Co. Thus, it does not mean that Apple has poor debt management. However, companies do use other sources to repay their liabilities. With a ratio of 0.88, Apple had lower liquidity in 2022, meaning it may not have been able to pay its short-term debt using liquid assets. We get the following financials from Apple’s annual report. Let us determine the current ratio of Apple Inc for 2022. had a ratio of 0.81 in 2021, which is lower than 1.2, it may have difficulty repaying its short-term debt obligations. had a ratio of 1.32 in 2022, which is higher than 1.2, indicating that the company is highly capable of repaying its short-term debt obligations.Īs Starlane Ltd. ![]() Let’s find the current ratio for 20 and interpret the ratio’s values. Current Ratio = Current Assets / Current Liabilities
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