Refer to the financial statements and related disclosure notes of PetSmart located in the company's 2013 annual report included with all new copies of the text. They also can be found at www.petsmart.com. At February 2, 2014, fiscal year, PetSmart reported current liabilities of $794.3 million in its balance sheet.
Required:
1. What are the five components of current liabilities?
2. Are current assets sufficient to cover current liabilities? What is the current ratio for the year ended February 2, 2014? How does the ratio compare with the prior year?
3. Why might a company want to avoid having its current ratio be too low? Too high?