Question

1. Calculate the current ratio for each of the following companies. (Round your answers to 2...

1. Calculate the current ratio for each of the following companies. (Round your answers to 2 decimal places.)
  

Current Assets Current Liabilities Current Ratio
Edison $79,000 $41,146
MAXT 105,070 99,138
Chatter 44,556 63,579
TRU 85,557 106,861
Gleeson 60,751 130,749


  
2. Identify the company with the strongest liquidity position. (These companies are competitors in the same industry.)
  

  • Edison

  • MAXT

  • Chatter

  • TRU

  • Gleeson

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Homework Answers

Answer #1

Current ratio=Current assets/Current liabilities

Current assets Current liabilities Current ratio
Edison 79,000 41,146 (79,000/41,146)=1.92(Approx)
MAXT 105,070 99,138 (105,070/99,138)=1.06(Approx)
Chatter 44,556 63,579 (44,556/63,579)=0.70(Approx)
TRU 85,557 106,861 (85,557/106,861)=0.80(Approx)
Gleeson 60,751 130,749 (60,751/130,749)=0.46(Approx)

Hence Edison has the strongest liquidity position having highest current ratio as compared to other companies( ie Current assets for each $ of current liabilities is comparatively higher)

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