Question

The data of Graham Brothers Corp. for two years are given below.

2018 2019
Cash and cash equivalents $5,400 $12,400
Total current liabilities 22,000 32,000
Based on the above​ information, which of the following statements is​ true?
A. Cash ratio has increased from 0.255 in 2018 to 0.368 in 2019.
B. Cash ratio has increased from 0.05 in 2018 to 0.08 in 2019.
C. Cash ratio has increased from 0.02 in 2018 to 0.03 in 2019.
D. Cash ratio has increased from 0.368 in 2018 to 0.255 in 2019.

Answer 1

Answer and Explanation:

The computation is shown below:

As we know that

Particulars 2018 2019

A Cash and Cash equivalents $5,400 $12,400

B Current Liabilities $22,000 $32,000

C = A ÷ B Cash Ratio 0.245 0.387

As we can see that the cash ratio is increased from 2018 i.e 0.245 to 2019 i.e 0.387

The options that are given in the question are all correct as this is the answer