Accounts payable Short-term debt Other current liabilities 5 7,070 4,250 1,240 1

Question

Accounts payable Short-term debt Other current liabilities 5 7,070 4,250 1,240 1,028 1,300 Total current liabilities s 8.310 s 6.578 1-a. Calculate the current ratio for Simon. Then calculate the current ratio for Garfunkel. (Round your answers to 2 decimal places.) Current Ratio Simon Garfunkel 1-b. Which of the two companies has the best current ratio? O Simon O Garfunkel 2-a. Calculate the acid-test (quick) ratio for Simon. Then calculate the acid-test (quick) ratio for Garfunkel. (Round your answers to 2 decimal pla Acid-test (quick) Ratio Simon Garfunkel 2-b. Which of the two companies has the best acid-test ratio? O Garfunkel

Explanation / Answer

1-a. Current ratio = Total current assets ÷ Total current liabilities

1-b. Garfunkel has the best current ratio

2-a. Acid test (quick) ratio = (Total current assets - Inventory) ÷ Total current liabilities

2-b. Garfunkel has the best acid test (quick) ratio.

Current ratio Simon 6,195÷8,310 = 0.74 Garfunkel 4,959÷6,578 = 0.75

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