Business Applications Case Using the current ratio
The following information was drawn from the balance sheets of the Alberta and Ottawa Companies.
|
Alberta Company
|
Ottawa Company
|
|
Current assets
|
$45,000
|
$72,000
|
|
Current liabilities
|
28,000
|
54,000
|
Required
a. Compute the current ratio for each company.
b. Which company has the greater likelihood of being able to pay its bills?
c. Assuming that both companies have the same amount of total assets, which company would produce the higher return on assets ratio?