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The Current Assets and Current Liabilities for Kolbie Company and Newton

Question 177

Essay

The current assets and current liabilities for Kolbie Company and Newton Company are as follows:
 Kolbie Company  Newton Company  in millions  in millions  For the Year Ending  For the Year Ending  December 31  December 31  Current assets:  Cash and cash equivalents $8,352$8,546 Short-term investments 6,034752 Accounts receivable 3,0295,152 Inventories 446660 Other current assets* 2,1952,829 Total current assets $20,056$17,939 Current liablities:  Accounts payable $4,970$10,430 Accrued and other current liabilities 3,3296,361 Total current liabilities $8,299$16,791\begin{array}{|l|r|r|}\hline &\text { Kolbie Company } & \text { Newton Company } \\&\text { in millions } & \text { in millions } \\&\text { For the Year Ending } & \text { For the Year Ending } \\&\text { December 31 } & \text { December 31 }\\\hline \text { Current assets: }\\\hline \text { Cash and cash equivalents } & \$ 8,352 & \$ 8,546 \\\hline \text { Short-term investments } & 6,034 & 752 \\\hline \text { Accounts receivable } & 3,029 & 5,152 \\\hline \text { Inventories } & 446 & 660 \\\hline \text { Other current assets* } & 2,195 & 2,829 \\\hline \text { Total current assets } & \$ 20,056 & \$ 17,939 \\\hline\\\hline\text { Current liablities: }\\\hline \text { Accounts payable } & \$ 4,970 & \$ 10,430 \\\hline \text { Accrued and other current liabilities } & 3,329 & 6,361 \\\hline \text { Total current liabilities } & \$ 8,299 & \$ 16,791 \\\hline\end{array} *These represent prepaid expenses and other non-quick current assets.
a- Determine the quick ratio for both companies.Round to two decimal places.
b- Interpret the quick ratio difference between the two companies.

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a- Quick ratio = Quick assets/Current li...

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