Key figures for the recent two years of Research In Motion and Apple follow. Required 1. Compute
Question:
Required
1. Compute the current ratio for both years for both companies.
2. Which company has the better ability to pay short-term obligations according to the current ratio?
3. Analyze and comment on each companys current ratios for the past two years.
4. How do RIMs and Apples current ratios compare to their industry (assumed) average ratio of2.4?
Research In Motion Apple Key Figures ($ millions) Current assets Current Year $5,813 2.432 Prior Year $4,842 2.115 Current Year $31,555 11,506 Prior Year $30,006 11,361
Step by Step Answer:
1 Research In Motions current ratios Current year 5813 2432 239 Prior year 4842 211...View the full answer
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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