Question

Selected financial data regarding current assets and current liabilities for The Home Depot and Lowe’s, two close competitors in the building supply industry, are as follows:


Required:
1. Calculate the current ratio for The Home Depot and Lowe’s. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher current ratio?
2. Calculate the acid-test (quick) ratio for The Home Depot and Lowe’s. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher acid-test ratio?
3. How would the purchase of additional inventory on credit affect the current ratio? How would it affect the acid-testratio?


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  • CreatedJuly 15, 2014
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