Regarding the liquidity of these two companies

Assignment Help Financial Management

Reference no: EM131995396

Company A has total assets of $125,000 and current assets of $25,000. Their cash and receivables were $15,000 in sum and they had no marketable securities. Company A has current liabilities of $15,000.

Company B has total assets of $115,000 and current assets of $35,000. Their cash, marketable securities, and receivables were $20,000 in sum. Company B has current liabilities of $10,000.

Which of the following is true regarding the liquidity of these two companies?

A. Both the current and quick ratio indicate that Company B is the most liquid.

B. The current ratio, but not the quick ratio, indicates Company B is more liquid.

C. Both the current and quick ratio indicate that Company A is the most liquid.

D. The current ratio, but not the quick ratio, indicates Company A is more liquid.

Reference no: EM131995396

Questions Cloud

You anticipate its firms to have the highest betas : In which of the following industries would you anticipate its firms to have the highest betas?

What price should the stock sell at if the discount rate : What price should the stock sell at if the discount rate is What price should the stock 12%. What price should the stock sell at if the discount rate is 10%.

What allows portfolio diversification to be achieved : What allows portfolio diversification to be achieved?

Compute the allowable foreign tax credit : Compute the allowable foreign tax credit. If, instead, the total foreign income taxes paid were $550,000, compute the allowable foreign tax credit.

Regarding the liquidity of these two companies : Which of the following is true regarding the liquidity of these two companies?

What happens to shares outstanding : If a large investor redeems 1 million shares, what happens to shares outstanding?

What are your nominal annual cash flows : If you invest in 5% coupon, 3 year TIPS and inflation is 3% each year, what are your nominal annual cash flows.

What the dividends will gonzo pay in the next three years : Gonzo growth corporation has never paid a dividend, and will not pay on in the coming year. what the dividends will Gonzo pay in the next 3 years?

Describes the financial concept of debt serviceability : What best describes the financial concept of debt serviceability?

User Account

All Pages