Solution-Which firm is the most liquid

Which firm is the most liquid

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Reference no: EM13491737

Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:

	Edison		Stagg		Thornton
Cash	$4,000	$2,500		$1,000
Short-term investments	3,000	2,500		2,000
Accounts receivable	2,000	2,500		3,000
Inventory	1,000	2,500		4,000
Prepaid expenses	800	800		800
Accounts payable	200	200		200
Notes payable: short-term	3,100	3,100		3,100
Accrued payables	300	300		300
Long-term liabilities	3,800	3,800		3,800

Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
Suppose Thornton is using FIFO for inventory valuation and Edison is using LIFO. Comment on the comparability of information between these two companies.
If all short-term notes payable are due on July 11 at 8 a.m., comment on each company's ability to settle its obligation in a timely manner.

Reference no: EM13491737

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Which firm is the most liquid

Reference no: EM13491737

Reference no: EM13491737

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