Sample Essay

The financial statements of the company were independently audited by ERNST & YOUNG LLP audit and accounting firm and an unqualified opinion was expressed in the auditor’s report. (McDonald’s Corporation, 2008, p. 57).

1. a.

The current ratio of any company can be calculated by the formula given below:

Current Assets

Current Ratio =

Current Liabilities

The quick assets are calculated by deducting inventories and prepaid expenses from current assets.

Quick Assets = Current Assets – (Inventories + Prepaid expenses)

The quick ratio of a company is calculated through the following formula:

Quick Assets

Quick Ratio =

Current Liabilities

2008:

3,517.6

Current Ratio =

2,537.9

Current Ratio = 1.386

Quick Assets = 3,517.6 – (111.50 + 411.50)

Quick Assets = 2,994.6

2,994.6

Quick Ratio =

2,537.9

Quick Ratio = 1.18

2007:

3,581.9

Current Ratio =

4,498.5

Current Ratio = 0.796

Quick Assets = 3,581.9 – (125.30 + 421.50)

Quick Assets = 3,035.1

3,035.1

Quick Ratio =

4,498.5

Quick Ratio = 0.675

The current ratio for 2008 is 1.386 and for 2007 it is 0.796 while the quick ratio for 2008 is 1.18 and the quick ratio for 2007 is 0.675 (McDonald’s Corporation, 2008, p. 41).

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