It appears that total of current assets and net cash provided by operating activities show that company is in a strong position to pay its current liabilities. Current liabilities for the year ended Februis $11,462 million.Current assets reflected in the balance sheet for the year ended Februis $15,372 million. It was observed that cash flow from operating activities reported by H D Company for the year ended Februis $6,975 million.Hence, based on debt ratio, company has no excessive debt. Total liabilities of the company are $23,307 million and total assets of the company are $41,084 million. Hence, based on quick ratio, company is unable to repay its current liabilities as they become due.ĭebt Ratio=Total Liabilities/Total Assets Business Operations Manager (Billing/Master Data) at The Goodyear Tire & Rubber Company North Canton, Ohio, United States. In the given case, most liquid current assets are low to meet its current liabilities. Quick ratio is a measure to determine company’s ability to current liabilities using most liquid current assets. Quick Ratio=Current Assets-Inventories/Current Liabilities Hence, company is able to repay its current liabilities as and when they become due. In the given case, company’s current ratio is 1.34:1 and current assets of the company are more than current liabilities. Note:The calculation is done on the basis of the data for Home Depot, Inc., in Appendix AĬompute the current ratio and quick ratio for the most recent year:Ĭurrent Ratio =Current Assets/Current Liabilities The calculation and explanation are as shown below:
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