Nestlé's financial statements are presented in Appendix B. Financial statements of Petra
Foods are presented in Appendix C.
Instructions
(a) At the end of the most recent fi scal year reported, what was Nestlé's largest current liability account? What were its total current liabilities? What was Petra Foods' largest current liability account? What were its total current liabilities?
(b) Based on information contained in those fi nancial statements, compute the following for each company for the most recent fi scal year reported.
(1) Working capital.
(2) Current ratio.
(c) What conclusions concerning the relative liquidity of these companies can be drawn from these data?
(d) Based on the information contained in those fi nancial statements, compute the following ratios for each company for the most recent fi scal year reported.
(1) Debt to assets ratio.
(2) Times interest earned.
(e) What conclusions concerning the companies' long-run solvency can be drawn from these ratios?