Calculating Liquidity Ratios The balance sheets for Red Oak Inc. and Birch Co. follow. Red Oak...

 

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Calculating Liquidity Ratios The balance sheets for Red Oak Inc. and Birch Co. follow. Red Oak Birch Current assets Cash Short-term investments Accounts receivable Inventory Other Noncurrent assets 15,000 18,000 17,000 5,000 5,000 6,000 285,000 317,000 Total assets $328,000 $356,000 Current liabilities $18,000 $30,000 Long-term liabilities 30,000 230,000 Stockholders' equity 280,000 96,000 Total liabilities and stockholders' equity $328,000 $356,000 Required Calculate the following ratios and comment on the results. Red Oak: Numerator Denominator Birch: $3,000 $10,000 3,000 Ratio a. Current ratio $ b. Quick ratio Ratio a. Current ratio $ b. Quick ratio Numerator Denominator Compared to Birch Company, Red Oak has a: Check Result Result + liquidity position. Calculating Liquidity Ratios The balance sheets for Red Oak Inc. and Birch Co. follow. Red Oak Birch Current assets Cash Short-term investments Accounts receivable Inventory Other Noncurrent assets 15,000 18,000 17,000 5,000 5,000 6,000 285,000 317,000 Total assets $328,000 $356,000 Current liabilities $18,000 $30,000 Long-term liabilities 30,000 230,000 Stockholders' equity 280,000 96,000 Total liabilities and stockholders' equity $328,000 $356,000 Required Calculate the following ratios and comment on the results. Red Oak: Numerator Denominator Birch: $3,000 $10,000 3,000 Ratio a. Current ratio $ b. Quick ratio Ratio a. Current ratio $ b. Quick ratio Numerator Denominator Compared to Birch Company, Red Oak has a: Check Result Result + liquidity position.

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Calculating Liquidity Ratios Red Oak a Current ratio Current assets Current liabilities 3000 15000 1... View the full answer