Part one

Part two

1. Liquidity ratios Aa Aa 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 Southem Inc. and Scramouche Opera Company are as follows: Balance Sheet December 31st (Millions of dollars) Scramouche Pellegrini Scramouche Pellegrini Southern Opera Company Southern Inc. Opera Company Inc. Assets Current assets Current liabilities Cash Accounts receivable Inventories $1,476 Accounts payable $o $2,296 840 2,464 5,600 $0 506 2,869 3,375 4,125 7,500 540 Accruals 1,584 Notes payable 3,600 Total current liabilities 2,700 2,700 3,300 6,000 Total current assets Net fixed assets Long-term bonds Net plant and equipment 4,400 4,400 Total debt Common equity 1,625 875 2,500 10,000 1,300 700 2,000 Common stock Retained earnings Total common equity Total liabilities and equity Total assets 10,000 8,000 8,000