Question

The balances in the current asset and liability accounts for Virden Ltd. (Virden) are provided below. The balances for inventory are provided using the FIFO and average cost formulas.


Required:
a. Calculate Virden’s current ratio on December 31, 2018, using the two cost formulas.
b. How do you explain the results you obtained in (a)?
c. How do the different results you obtained in (a) affect your analysis of Virden Ltd.’s liquidity?
d. Which current ratio provides the best measure of Virden’s liquidity?Explain.


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  • CreatedFebruary 26, 2015
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