Margo Company and Shiprock Company have the following financial information:

1. Compute the acid-test ratios for the two companies.
2. Compute the current ratios for the two companies.
3. Interpretive Question: Assume you are a banker and that the two companies have come to you for a $\$ 10,000,000$ loan. Both companies belong to an industry where products change very rapidly. Which company would you have the greatest concern about and why?

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Cash....... Investments held for sale. Accounts receivable $ 1,500 2,000 4.500 in 000's Margo Company Shiprock Company $ 4,500 5,000 9,000 Inventory 22,000 10,000 Total current assets. $30,000 $28,500 Total current liabilities. $20,000 $20,000