Key figures for the recent two years of both Best Buy and Circuit City follow.

Required
1. Compute the current ratio for both years and both companies.
2. Which company has the better ability to pay short-term obligations according to the current ratio?
3. Analyze and comment on each company’s current ratios for the past two years.
4. How do Best Buy’s and Circuit City’s current ratios compare to their industry average ratio of 1.6?

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Kay Figures (5 thousands) Current assets Current liabilities Best Buy Circule City Current Year Prior Year Current Year Prior Year $6.903,000 $5.724,000 $2,685,715 $2,919,061 4.959.000 4,501,000 1,263,846 1.138,198