The balance sheets for Red Oak Inc. and Birch Co. follow. Red Oak Birch Current assets Cash $8,000 $10,000 Short-term investments 3,000 Accounts receivable 40,000 18,000 Inventory 17,000 5,000 Other 5,000 6,000 Noncurrent assets 285,000 317,000 Total assets $358,000 $356,000 Current liabilities $48,000 $30,000 Long-term liabilities 30,000 230,000 280,000 96,000 Stockholders' equity Total liabilities and stockholders' equity $358,000 $356,000 Required Calculate the following ratios and comment on the results. Red Oak: Ratio Numerator Denominator Result a. Current ratio $ 0x - $ 0x = b. Quick ratio $ 0x = $ 0x = Birch: Ratio Numerator Denominator Result a. Current ratio $ 0 x $ 0x = b. Quick ratio $ 0 x $ 0x = Compared to Birch Company, Red Oak has a stronger liquidity position.

The balance sheets for Red Oak Inc. and Birch Co. follow. Red Oak Birch Current assets Cash $8,000 $10,000 Short-term investments 3,000 Accounts receivable 40,000 18,000 Inventory 17,000 5,000 Other 5,000 6,000 Noncurrent assets 285,000 317,000 Total assets $358,000 $356,000 Current liabilities $48,000 $30,000 Long-term liabilities 30,000 230,000 280,000 96,000 Stockholders' equity Total liabilities and stockholders' equity $358,000 $356,000 Required Calculate the following ratios and comment on the results. Red Oak: Ratio Numerator Denominator Result a. Current ratio $ 0x - $ 0x = b. Quick ratio $ 0x = $ 0x = Birch: Ratio Numerator Denominator Result a. Current ratio $ 0 x $ 0x = b. Quick ratio $ 0 x $ 0x = Compared to Birch Company, Red Oak has a stronger liquidity position.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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