Question

In december 2015, apple had cash of $38.07 billion, current assets of $76.22 billion, and current liabilities of $76.09 billion. It also had inventories of $2.45 billion.A. What was apple's current ratio?B. What was apple's quick ratio?
c. In january 2016, hewlett-packard had a quick ratio of 0.66 and a current ratio of 0.90. What can you say about the asset liquidity of apple relative to hewlett-packard?

Answer 1

A. Current ratio = Current assets/current liabilities

Current assets = Cash + inventories + current assets = 38.07+76.22+2.45 = 116.74 billion

Current liabilities = 76.09 billion

Current ratio = 116.74 billion/76.09 billion = 1.53

B. Quick ratio = (Current assets - inventory)/current liabilities =(116.74-2.45)/76.09 = 1.60

C. When compared to Hewlett-Packard, both the quick ratio and the current ratio of Apple are higher. This means that Apple is in a better liquidity position than Hewlett-Packard. In other words, Hewlett-Packard has to improve its liquidity position when compared to Apple