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

1-a. Calculate the current ratio for the past two years.

1-b. Did the current ratio improve or worsen in the more recent year?

2-a. Calculate the acid-test (quick) ratio for the past two years.

2-b. Did the acid-test ratio improve or worsen in the more recent year?

3. If American Eagle used $100 million in cash to pay $100 million in accounts payable, how would its current ratio and acid-test ratio change?