Determine the firms current ratio and quick ratio

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Reference no: EM13522190

Liquidity Analysis: Current Ratio and Quick Ratio

Wesfarmers Limited is a major diversified Australian public company with interests in fertilizer and chemicals manufacturing, gas processing and distribution, coal mining and production, building materials, hardware and forest products, rural and country services, transport, country supermarkets, and insurance. The following schedule summarizes the composition of current assets and current liabilities reported on its June 30, 1996 and June 30, 1997 balance sheets:


Wesfarmers Limited


1997

1996


(Dollars in millions)


Total current assets

$761

$688

Inventories included in



current assets

368

1

Receivables



included in current assets

362

685

Total current liabilities

822

155

Required

a. Based on the information given here, determine the firm's current ratio and quick ratio at the end of 1997 and 1996.

b. In which year do you consider the firm to be in better financial condition? Explain

Reference no: EM13522190

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