[doingrightthing]

Read the "Taking it to the Net" exercise on page 490 of the Understanding Business text and answer the two associated questions in at least 250 words.

Formulas:

Current assets = Cash + Accounts receivable + marketable securities + inventory
Current ratio = Current assets/Current liabilities
Acid-test ratio = (Cash + Accounts receivable + Marketable securities) /Current liabilities
Calculate the current ratio for each company. Then, based only on the current ratio answer the following: Which company is more likely to get the loan? Why? Now, calculate the acid-test ratio and see if this changes your opinion. The acid-test ratio is similar to the current ratio, however it does not include the value of the firm's inventory. Because inventory is often difficult to sell, this ratio is considered an even more reliable measure of a business's ability to pay loans than the current ratio.
Using the calculated acid-test ratio for each business, discuss whether this additional calculation confirms your previous decision (that was based only on the current ratio) or if you would change your decision. Be specific

[Wondergirl]

We don't have that text and don't have the necessary background information. If you write your essays, I will be glad to edit them for form and style.

[NeedKarma]

Could you send me the textbook please?