Comparing Companies within an Industry Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book.

Required:

1. Compute the quick ratio for each company for the current year.

2. Compare the most recent quick ratio for each company to the industry average from the Industry Ratio Report. Based solely on the quick ratio, are these companies more or less liquid than the average company in their industry?

3. Compute the payable turnover ratio for each company for the most recent reporting year.

4. Compare the latest year payable turnover ratio for each company to the industry average from the Industry Ratio Report. Are these companies doing better or worse than the average company in their industry at paying trade creditors?

5. Using this information and any other data from the annual report, write a brief assessment of the liquidity for the two companies.