Data Analytics Cases, you used Tableau to examine a data set and create charts to compare our two (hypothetical) publicly traded companies, Discount Goods and Big Store, as to their liquidity - their ability to pay short-term debts as they come due. You did so by comparing current ratios and acid-test ratios. In this case , you will expand your assessment of the companies’ liquidity by also evaluating other aspects of liquidity as measured by their cash to current liabilities and current liabilities to net worth ratios. The cash to current liabilities ratio (also known as the cash ratio) is measured as cash and cash equivalents / total current liabilities and tells us about the ability of a company to settle its current liabilities using only its cash and highly liquid investments. The current liabilities to net worth ratio is measured as current liabilities / shareholders’ equity and tells us about the relationship between capital contributed by current obligation creditors and capital contributed by owners. It indicates the ability of a company to safely meet the obligations of current creditors. The higher the ratio, the less security there is for current obligation creditors. 

Required: 

Use Tableau to create calculations for the current, acid-test, cash to current liabilities, and current liabilities to net worth ratios for each of the two companies in 2021. Based upon what you find, answer the following questions: 

1. Other things being equal, which company appears to have the better liquidity position in terms of their ability to pay short-term debts as they come due as measured by the current ratio? 

2. Which company appears to offer the better liquidity position in terms of their ability to pay short-term debts as they come due as measured by the acid-test or quick ratio? 

3. Other things being equal, which company appears to have the better liquidity position in terms of ability of the company’s current liabilities to be covered using its cash and cash equivalents? 

4. Which company appears to offer the better security for its current obligation creditors as measured by the current liabilities to net worth ratio? Note: As you assess the liquidity aspect of the companies, keep in mind that liquidity ratios should be evaluated in the context of both profitability and efficiency of managing assets and relative to average liquidity ratios of the industry.