You have been given the following condensed financial data for two companies from different industries: Instructions Divide
Question:
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Instructions
Divide the class into groups. Assign half your group members to Utility Corp. and the remaining group members to Retail Co. Ltd. Then do the following:
(a) Calculate the following ratios for 2012:
(1) Current ratio,
(2) Cash current debt coverage,
(3) Debt to total assets, and
(4) Cash total debt coverage.
(b) Assess the company's liquidity and solvency, including the answers to the following questions in your analysis:
1. What liquidity and solvency risk is there for your company?
2. What additional information would you need to make a more detailed analysis?
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
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Step by Step Answer:
b 1 Utility Corp has liquidity problems as evidenced by the cash current debt coverage and the current ratios Retail Co Ltd has sufficient current ass...View the full answer
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Related Book For 
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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