Question
The following data has been extracted from financial statements of 2 companies. Both companies have the same current ratio. Do both companies have equal ability
The following data has been extracted from financial statements of 2 companies. Both companies have the same current ratio. Do both companies have equal ability to pay its short-term obligations? Why?
| Company A | Company B | |
| Current Asset | ||
| Cash | 50000 | 4000 |
| Account Recievable | 120000 | 16000 |
| Prepaid expenses | 10000 | 10000 |
| Inventory | 170000 | 320000 |
| Total Current Assets | 350000 | 350000 |
| Total Current Liabilities | 175000 | 175000 |
| Current Ratio | 2:1 | 2:1 |
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Audits Of Public Companies Continued Concentration In Audit Market For Large Public Companies Does Not Call For Immediate Action
Authors: United States Government Accountability
1st Edition
1297008111, 978-1297008115
