Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book.

Required:

1. Calculate the current ratio for both companies for the year ended February 3, 2018. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher current ratio?

2. Calculate the acid-test (quick) ratio for both companies for the year ended February 3, 2018. Which company has the better ratio? Compare your calculations with those for United Airlines and American Airlines reported in the chapter text. Which industry maintains a higher acid-test ratio?

3. How would the purchase of additional inventory with accounts payable affect the current ratio for these two companies?