# Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note...

## Question:

Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Balance Sheet (Millions of $) Assets 2016 Cash and securities$ 1,554.0 Accounts receivable 9,660.0 Inventories 13,440.0 Total current assets $24,654.0 Net plant and equipment 17,346.0 Total assets$42,000.0 Liabilities and Equity Accounts payable $7,980.0 Notes payable 5,880.0 Accruals 4,620.0 Total current liabilities$18,480.0 Long-term bonds 10,920.0 Total liabilities $29,400.0 Common stock 3,360.0 Retained earnings 9,240.0 Total common equity$12,600.0 Total liabilities and equity $42,000.0 Income Statement (Millions of$) 2016 Net sales $58,800.0 Operating costs except depr'n$54,978.0 Depreciation $1,029.0 Earnings bef int and taxes (EBIT)$ 2,793.0 Less interest 1,050.0 Earnings before taxes (EBT) $1,743.0 Taxes$ 610.1 Net income $1,133.0 Other data: Shares outstanding (millions) 175.00 Common dividends$ 509.83 Int rate on notes payable & L-T bonds 6.25% Federal plus state income tax rate 35% Year-end stock price \$77.69 Refer to the data for Pettijohn Inc.What is the firm's current ratio? Select one:

a. 1.20

b. 1.33

c. 1.08

d. 1.47

e. 0.97

## Current Ratio:

Current Ratio is given as the total current assets divided by the current liabilities of the company. It is calculated to find out the liquidity position of the company and whether the company has sufficient current assets to pay off the current liabilities.

## Answer and Explanation:

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#### Learn more about this topic: Current Ratio in Accounting: Definition, Formula & Analysis

from Introduction to Business: Homework Help Resource

Chapter 22 / Lesson 26
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