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Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short-term funds. Which group
Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short-term funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? O Long-term lenders O Short-term lenders The most recent data from the annual balance sheets of Pellegrini Southern Inc. and Zebra Paper Corp. are as follows: Balance Sheet December 31st (Millions of dollars) Zebra Paper Pellegrini Southern Corp. Zebra Paper Pellegrini Southern Corp. Inc. Inc. Assets Liabilities Current assets Current liabilities Cash $4,879 $3,136 Accounts payable $0 $0 Accounts receivable 1,785 1,148 Accruals 1,076 0 Inventories 5,236 3,366 Notes payable 6,096 5,737 Total current assets 11,900 7,650 Total current 7,172 5,737 liabilities Net fixed assets Long-term bonds 8,765 7,013 Net plant and 9,350 9,350 Total debt 15,937 12,750 equipment Common equity Common stock 3,453 2,763 Retained earnings 1,860 1,487 Total common 5,313 4,250 equity Total assets 21,250 17,000 Total liabilities and 21,250 17,000 equity ; Zebra Paper Corp.'s current ratio is , and its Pellegrini Southern Inc.'s current ratio is quick ratio is , and its quick ratio is Note: Round your values to four decimal places. Which of the following statements are true? Check all that apply. Zebra Paper Corp. has a better ability to meet its short-term liabilities than Pellegrini Southern Inc.. A current ratio of 1 indicates that the book value of the company's current assets is equal to the book value of its current liabilities. An increase in the quick ratio over time usually means that the company's liquidity position is improving and that the company is managing its short-term assets well. Compared to Pellegrini Southern Inc., Zebra Paper Corp. has less liquidity and a lower reliance on outside cash flow to finance its short- term obligations. An increase in the current ratio over time always means that the company's liquidity position is improving
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