Selected financial data regarding two competing airlines are provided as follows:

Required:
1. Calculate the current ratio for both companies. Which airline has the best current ratio?
2. Calculate the acid-test (quick) ratio for both companies. Which airline has the best acid-test ratio?
3. How would the purchase of additional inventory by issuing short-term debt affect the current ratio? How would it affect the acid-test ratio?

(S in millions) Current assets Company A Company B Cash and cash equivalents Short-term investments Net receivables Inventory Other current assets S1,225 3,104 811 525 270 S5,935 $4,684 1,351 1.844 388 637 S8,904 Total current assets Current liabilities Accounts payable Short-term debt Other current liabilities S6,702 2,672 S6,991 2,407 1.624 S11,022 Total current liabilities S9,374