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Data (in millions) from recent financial statements of Zynga Inc. (ZNGA), Electronic Arts Inc. (EA), and Take-Two

Question:

Data (in millions) from recent financial statements of Zynga Inc. (ZNGA), Electronic Arts Inc. (EA), and Take-Two Interactive Software, Inc. (TTWO) are as follows:

a. Compute the working capital for Year 2 and Year 1 for each company.
b. Which company has the largest working capital?
c. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place.
d. For Year 2, rank the companies from most liquid to least liquid based upon the current ratio.

Transcribed Image Text:

Zynga Electronic Arts Take-Two Year 2 Year 1 Year 2 Year 1 Year 2 Year 1 $1,576 $747 $6,381 2,265 Current assets $6,004 $2,828 $2,409 Current liabilities 792 480 2,491 1,952 1,727

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a b Electronic Arts has the largest working capital for both years 4116 for Year 2 and 351...View the full answer


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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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