Given Below Are Three Ratios Calculated for Hall,Link,and Dollar Companies

question 56

Essay

Given below are three ratios calculated for Hall,Link,and Dollar Companies for 2018 and 2017.
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$\begin{array}{|ll|l|l|l|} \hline\text { (in } \text { millions) }&& \text { Hall } & \text { Link } & \text { Dollar } \\\hline \text { Current ratio }&\text { December 31,2018 } & 2.8 \text { to } 1 & 2.3 \text { to } 1 & 1.8 \text { to } 1 \\&\text { December 31,2017 } & 2.0 \text { to } 1 & 1.5 \text { to } 1 & 2.2 \text { to } 1 \\\hline \text { Inventory turnover ratio }&\text { December 31,2018 } & 6.9 \text { times } & 5.8 \text { times } & 8.0 \text { times } \\&\text { December 31,2017 } & 7.6 \text { times } & 5.8 \text { times } & 9.6 \text { times } \\\hline \text { Acid-test ratio }&\text { December } 31,2018 & 2.5 \text { to } 1 & 2.1 \text { to } 1 & 0.5 \text { to } 1 \\&\text { December } 31,2017 & 1.0 \text { to } 1 & 1.4 \text { to } 1 & 1.2 \text { to } 1 \\\hline\end{array}$ A) Which company has the greatest percentage of inventory and prepaids? How can you tell?
B) Which company appears to be heading in the wrong direction concerning the ability to pay its bills in a very short-run situation? Explain.
C) Which company appears to be the most liquid? Explain.

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Definitions:

Vertical Integration

A strategy where a firm expands its operations into different stages of production or distribution within the same industry.

Strategic Alliance

A formal pact made between multiple parties to achieve common aims, notwithstanding their continuing independence as organizations.

Acquisition

The process of obtaining control of another company by purchasing it or merging with it.

Achieving Legitimacy

The process of gaining acceptance, credibility, and recognition within a particular context or among a specific audience.