Question - Information from the books of Smith and Stone follows:
|
|
Smith (in $ millions)
|
Stone (in $ millions)
|
|
Cash
|
$930
|
$13,279
|
|
Marketable securities
|
190
|
55
|
|
Accounts receivable
|
1,730
|
19,212
|
|
All other current assets
|
2,153
|
19,993
|
|
Total current liabilities
|
2,432
|
43,003
|
|
Total liabilities
|
4,796
|
74,282
|
|
Total equity
|
4,020
|
40,517
|
|
Pre-tax income
|
640
|
9,415
|
|
Interest expense
|
35
|
597
|
Complete the following:
a. Calculate the current ratio and quick ratio for both companies.
b. Which company is more liquid?
c. Calculate the times-interest-earned ratio and debt-to-equity ratio for both companies.
d. Which company is more solvent?