Use the Following Selected Financial Information to Compare These Two

question 92

Essay

Use the following selected financial information to compare these two companies at December 31,Year 1,and to answer the questions that follow.
$\begin{array}{lrrr}&\underline{\text { Robin's Co.} }&\underline{\text { Ruth's Co }}\\\text { Cash } & \$ 1,100 & \$ 300 \\\text { Short-term investments } & 100 & 900 \\\text { Accounts and notes receivable } & 11,700 & 12,400 \\\text { Inventories } & 1,200 & 1,000 \\\text { Prepaid expenses } & 1,400 & 600 \\\quad \text { Total current assets } & 15,500 & 15,200\\\\\text { Total current liabilities } & 5,000 & 4,000 \\\text { Long-term liabilities } & 2,300 & 12,000 \\\text { Shareholders' equity } & 5,300 & 7,300\end{array}$

A) Compute the current ratios for the two companies.

B) Compute the quick ratios for the two companies.

C) Which company appears to be more liquid?

D) What ather ratios would help to more fully assess the liquidity of these two companies?

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Definitions:

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Garments made from the skin of animals, primarily cows, processed and designed for wear primarily as outerwear.

Utility Function

A mathematical representation of a consumer's preference ranking for bundles of goods or services, used to predict economic behavior.

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The solid parts of milk that coagulate when milk is soured or treated with enzymes, used in cheese-making.

Whey

A liquid by-product of cheese production, rich in proteins and lactose, commonly used as a dietary supplement and in various food products.