Charlotte Foods Corporation manufactures and distributes prepared foods. Slidell, Inc. operates more than 300 restaurants located in 19 states. The following schedule lists the year-end current assets and current liabilities of these two firms for 2008 and 2009. Dollars are presented in thousands.
(a) Compute the following items for both companies for 2008 and 2009:
(1) Working capital
(2) Current ratio
(3) Quick ratio
(b) Given the data computed in part (a), which of these two companies had the stronger liquidity at the end of 2008 and at the end of 2009? Why?
(c) In your opinion, which of the three measures that you computed in part (a) is the best measure of liquidity? Explain.
(d) Review the data presented for each company. Are there any unusual items or unusual relationships in either company’s data that a decision maker might want to investigate further? If so, identify these items and the issues or questions that decision makers would likely raise.

  • CreatedMarch 27, 2015
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