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The Jamesway Printing Corporation has current assets of $3.0 million. Of this total, $1.0 million is inventory, $0.5 million is cash, $1.
The Jamesway Printing Corporation has current assets of $3.0 million. Of this total, $1.0 million is inventory, $0.5 million is cash, $1.0 million is accounts receivable, and the balance is marketable securities. Jamesway has $1.5 million in current liabilities.a. What are the currentand the quick ratios for Jamesway?b. If Jamesway takes $.25 million in cash and pays off $.25 million of current liabilities, what happens to its current and quick ratios? What happens to its real liquidity?c. If Jamesway sells $.5 million of its accounts receivable to a bank and uses the proceeds to pay off short-term debt obligations, what happens to its current and quick ratios?d. If Jamesway sells $1.0 million in new stock and places the proceeds in marketable securities, what happens to its current and quick ratios?e. What do these examples illustrate about the current and quick ratios?
