c) How does Chem-Meds current ratio for 20XW compare to Pharmacias? How does it compare to the industry average? Compute Chem-Meds current ratio for 20XZ. Is there any problem with it?.

Chem-Meds Current ratios:

Year 20XW

20XZ

$ in thousands

Other related data for comparison:

Year Pharmacia Inc. 20XW 2.8 times

Current Assets / $1720 $593

Current ratio 2.9 times

1.98 times

Current Liabilities $3261 $1647

Industry average 2.4 times

This shows that Chem-Meds current assets have the capacity to cover more than twice its outstanding current obligations. Furthermore, its current ratio is 0.10 times higher as compared to Pharmacia Inc. Chem-meds current ratio is 0.50 times well above the industry average.