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Liquidity ratio

Josh Smith has compiled some of his personal financial data to determine his liquidity position. The data are as follows.


Account                           Amount

Cash                                  $3,200

Marketable securities       1,000

Checking account                 800

Credit card payables         1,200

Short-term notes payable   900


a. Calculate Josh's liquidity ratio.

b. Several of Josh's friends have told him that they have liquidity ratios of about 1.8. How would you analyze Josh's liquidity relative to his friends?


Please provide your own work. Thanks.


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