Financial information for American Eagle is presented in Appendix A at the end of the book. Required:

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Financial information for American Eagle is presented in Appendix A at the end of the book.

Required:
1. Calculate the current ratio for the past two years. Did the current ratio improve or weaken in the more recent year?
2. Calculate the acid-test (quick) ratio for the past two years. Did the acid-test ratio improve or weaken in the more recent year?
3. If American Eagle used $100 million in current investments to pay $100 million in accounts payable, how would its current ratio and acid-test ratio change? Show your calculations.

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Financial Accounting

ISBN: 978-0078025549

3rd edition

Authors: J. David Spiceland, Wayne Thomas, Don Herrmann

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