The following information refers to Annie's Attic and its competitors in the antiques business:
Required:
Comment on the relative liquidity positions of these companies.
Definitions:
Incremental Borrowing Rate
The interest rate a lessee would have to pay if borrowing over a similar term, and with similar security, the funds necessary to lease or purchase an asset.
Lessor's Implicit Rate
The interest rate used in lease agreements, assumed by the lessor, that when applied to the lease payments, equals the fair value of the leased asset.
Ordinary Annuity
A series of equal payments made at the end of consecutive periods over a fixed length of time, such as monthly rent or annual scholarship allowances.
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