Question

In December 2015​, Apple had cash of $ 37.69 ​billion, current assets of $ 75.91 ​billion, and current liabilities of $ 76.31 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) 0.99

(b) 0.96

(c) Apple has better liquidity

Step-by-step explanation:

(a) Apple's current​ ratio:

= Current assets ÷ Current liabilities

= $ 75.91 ​billion ÷ $ 76.31 billion

= 0.99

(b) Apple's quick​ ratio:

= (Current assets - Inventory) ÷ Current liabilities

= ($ 75.91 ​billion - $ 2.45 billion) ÷$ 76.31 billion

= 0.96

(c) In January 2016​,

Quick ratio = 0.66

Current ratio = 0.90

In comparison to H-P assets quality Apple has much better quality. Current ratio and quick ratio of apple is better than H-P which shows that apple has better liquidity than H-P.