Selected financial data regarding two competing airlines are provided as follows: Required: 1. Calculate the current ratio
Question:
Required:
1. Calculate the current ratio for both companies. Which airline has the best current ratio?
2. Calculate the acid-test (quick) ratio for both companies. Which airline has the best acid-test ratio?
3. How would the purchase of additional inventory by issuing short-term debt affect the current ratio? How would it affect the acid-test ratio?
Transcribed Image Text:
(S in millions) Current assets Company A Company B Cash and cash equivalents Short-term investments Net receivables Inventory Other current assets S1,225 3,104 811 525 270 S5,935 $4,684 1,351 1.844 388 637 S8,904 Total current assets Current liabilities Accounts payable Short-term debt Other current liabilities S6,702 2,672 S6,991 2,407 1.624 S11,022 Total current liabilities S9,374
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Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
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