Fairfield Corporation owns three separate subsidiaries. The Board of Directors is developing a strategy to withdraw $1,000,000 in cash from one of the subsidiaries to finance the acquisition of a fourth business.

Prepare the current and quick ratio for each subsidiary, and rank order the subsidiaries based on their ability to pay a dividend to the parent company without jeopardizing liquidity.

Transcribed Image Text:

Sub A Cash $1,000,000 Trading securities 3,000,000 2,000,000 Sub B $3,000,000 Sub C $ 5,000,000 1,000,000 Accounts receivable 6,000,000 5,000,000 14,000,000 Inventory 4,000,000 8,000,000 7,000,000 Prepaid rent 2,000,000 2,000,000 3,000,000 Accounts payable 5,000,000 2,000,000 8,000,000 Interest payable 1,000,000 1,000,000 6,000,000 Note payable (due in 6 months) 4,000,000 1,500,000 4,000,000 Unearned revenues 3,000,000 500,000 2,000,000