The financial data for Cumberland Drilling Ltd. are as follows (amounts in thousands):

Required

a. Calculate the current and quick ratios for 2017 through 2020.

b. Comment on the short-term liquidity position of Cumberland.

c. Is your analysis in part “a” a trend analysis or a cross-sectional analysis? What is this type of analysis most useful for?

d. Which ratio do you think is the better measure of short-term liquidity for Cumberland? Can you tell? Explain. What would your answer depend on?

Transcribed Image Text:

2017 2018 2020 2019 Current assets $ 448 1,204 5,068 $ 392 1,344 3,472 $ 224 1,456 2,576 $ 336 1,120 1,820 780 Cash Accounts receivable Inventories Prepaid ex penses 780 920 $6,128 780 $5,036 $4,056 $7,500 2017 2018 2019 2020 Current liabilities Accounts payable Accrued salaries Other current liabilities $2,296 $1,848 $1,680 $2,184 336 448 420 280 196 420 280 840 $3,556 $2,968 $2,548 $2,156