Question
Company A and Company B were competitors, and both engaged in buying and selling the same products. Their Balance Sheet after operation is shown below.
Company A and Company B were competitors, and both engaged in buying and selling the same products. Their Balance Sheet after operation is shown below.
Company A Company B
Current Assets:
Cash in Bank P 110,000 P 105,000
Accounts Receivable 85,000 65,000
Merchandise Inventory 125,000 75,000
Prepaid Expenses 20,000 6,000
Current Liabilities:
Accounts Payable 40,000 35,000
Accrued Expense 20,000 --
Notes Payable -- 15,000
- Determine the working capital of each company. ____________________________
- Which of the two companies has a better liquid position? Compute and interpret their respective current ratio. ______________________________________________________________
- Which of the two companies was more liquid in terms of paying debts right away. Compute and interpret their respective acid-test ratio.
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Routledge Handbook Of Environmental Accounting
Authors: Jan Bebbington, Carlos Larrinaga, Brendan O'Dwyer, Ian Thomson
1st Edition
0367724901, 9780367724900
