Final answer:
The current ratio for Queen's Line is 33.14%, indicating that it may have difficulty meeting its short-term obligations. The acid-test ratio is 23.65%, which suggests that the company's most liquid assets are not sufficient to cover its current liabilities.
Step-by-step explanation:
To calculate the current ratio, we divide the total current assets by the total current liabilities. In this case, the current assets are $875 million and the current liabilities are $2,638 million. So, the current ratio is:
Current Ratio = Total Current Assets / Total Current Liabilities
Current Ratio = 875 / 2638
Current Ratio = 0.3314 or 33.14%
To calculate the acid-test ratio, we take into account only the most liquid current assets, which are cash and cash equivalents, current investments, and net receivables. In this case, the total of these assets is $331 million + $63 million + $230 million = $624 million. So, the acid-test ratio is:
Acid-Test Ratio = (Cash + Current Investments + Net Receivables) / Total Current Liabilities
Acid-Test Ratio = 624 / 2638
Acid-Test Ratio = 0.2365 or 23.65%