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Given the following information for two companies: Company Current Ratio Quick Ratio Debt-to-Equity Ratio Return on Equity A 2.5 1.8 0.75 15% B 1.8 1.4

Given the following information for two companies:

Company

Current Ratio

Quick Ratio

Debt-to-Equity Ratio

Return on Equity

A

2.5

1.8

0.75

15%

B

1.8

1.4

1.2

12%

Requirements:

(a) Interpret the current ratio and quick ratio for each company. (b) Compare the debt-to-equity ratio and its implications for financial stability. (c) Analyze the return on equity for both companies. (d) Provide recommendations based on the financial ratios.

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