Tutor Nick CarterFinancial Ratios
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
| Edison | Stagg | Thornton | |||
Cash | $6,000 | $5,000 | $4,000 |
| ||
Short-term investments | 3,000 | 2,500 | 2,000 |
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Accounts receivable | 2,000 | 2,500 | 3,000 |
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Inventory | 1,000 | 2,500 | 4,000 |
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Prepaid expenses | 800 | 800 | 800 |
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Accounts payable | 200 | 200 | 200 |
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Notes payable: short-term | 3,100 | 3,100 | 3,100 |
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Accrued payables | 300 | 300 | 300 |
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Long-term liabilities | 3,800 | 3,800 | 3,800 |
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- Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
11 years ago
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