The following information was summarized from the balance sheets of the Better Books and Tenacious Texts at December 31, 2016:
REQUIRED:
1. Using the information provided, compute the following for each company at the end of 2016:
a. Current ratio
b. Quick ratio
2. Better Books reported cash flow from operations of $7,500 million during 2016. Tenacious Texts reported cash flow from operations of $7,000 million. Current liabilities reported by Better Books and Tenacious Texts at December 31, 2015, were $13,200 million and $7,700 million, respectively. Compute the cash flow from operations to current liabilities ratio for each company for 2016.
3. Comment briefly on the liquidity of each of these two companies. Which appears to be more liquid?
4. What other ratios would help you more fully assess the liquidity of these companies?

Question

The following information was summarized from the balance sheets of the Better Books and Tenacious Texts at December 31, 2016:
  REQUIRED:
1. Using the information provided, compute the following for each company at the end of 2016:
a. Current ratio
b. Quick ratio
2. Better Books reported cash flow from operations of $7,500 million during 2016. Tenacious Texts reported cash flow from operations of $7,000 million. Current liabilities reported by Better Books and Tenacious Texts at December 31, 2015, were $13,200 million and $7,700 million, respectively. Compute the cash flow from operations to current liabilities ratio for each company for 2016.
3. Comment briefly on the liquidity of each of these two companies. Which appears to be more liquid?
4. What other ratios would help you more fully assess the liquidity of these companies?

Quizplus · Accepted Answer

The Answer of The following information was summarized from the balance sheets of the Better Books and Tenacious Texts at December 31, 2016:
  REQUIRED:
1. Using the information provided, compute the following for each company at the end of 2016:
a. Current ratio
b. Quick ratio
2. Better Books reported cash flow from operations of $7,500 million during 2016. Tenacious Texts reported cash flow from operations of $7,000 million. Current liabilities reported by Better Books and Tenacious Texts at December 31, 2015, were $13,200 million and $7,700 million, respectively. Compute the cash flow from operations to current liabilities ratio for each company for 2016.
3. Comment briefly on the liquidity of each of these two companies. Which appears to be more liquid?
4. What other ratios would help you more fully assess the liquidity of these companies?

The Following Information Was Summarized from the Balance Sheets of the Better