The Following Information Is Available for Trico and Its Two

question 40

Essay

The following information is available for Trico and its two main competitors in the industry (Duco and Unico):
$$\begin{array} { | l | r | r | r | } \hline & \text { Trico } & \text { Duco } & \text { Unico } \\\hline \text { Cash } & \$ 9,800 & \$ 10,500 & \$ 26,500 \\\hline \text { Short-term investrments } & 6,400 & 8,200 & 12,500 \\\hline \text { Accounts receivable } & 12,500 & 8,500 & 14,350 \\\hline \text { Merchandise inveritory } & 3 0 , 1 5 0& 40,000 & 40,150 \\\hline \text { Prepaid expense } & 900 & 6,750 & 2 , 4 5 0\\\hline \text { Accounts payable } & 19,400 & 13,750 & 2 6 , 8 0 0 \\\hline \text { Salaries payable } & 1,200 & 3,500 & 6,250 \\\hline \text { Other current payables } & 600 & 1,200 &2 , 1 5 0 \\\hline\end{array}$$
The industry standard for the current ratio is 1.8 and the industry standard for the acid-test ratio is 1.
Required:
1.Calculate the current ratio and acid-test ratio for each firm.
2.Rank the firms in decreasing order of liquidity.
3.Comment on Trico's relative liquidity position.

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Definitions:

ECG

Electrocardiogram, a medical test that measures the electrical activity of the heart to identify various heart conditions.

Isoelectric Line

A baseline in an electrocardiogram (ECG) from which the electrical activity of the heart is measured.

Intervals

Periods or durations of time between two events or points in time, often used in reference to exercise, physiology, or musical rhythm.

ECG

Electrocardiogram: a test that records the electrical activity of the heart to show abnormal rhythms and detect heart problems.