The following information was drawn from the balance sheets of the Augusta and Reno Companies:

Required

a. Compute the current ratio for each company.

b. Which company has the greater likelihood of being able to pay its bills?

c. Assume that both companies have the same amount of total assets. Speculate as to which company would produce the higher return-on-assets ratio.

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Augusta Company Reno Company Current assets $45,000 $72,000 Current liabilities 28,000 54,000