Question

Balance Sheet December 31s (Millions of dollars) Scramouche Opera N&B Equipment Scramouche Opera Company Company Company Liabilities Current liabilities N&B Equipment Company Assets Current assets Cash $861 $553 Accounts $0 payable Accounts 315 203 Accruals 190 receivable Inventories 1,012 924 $2,100 594 $1,350 1,075 $1,265 Total current $1,012 assets Notes payable Total current liabilities Long-term bonds Total debt Net fixed assets 1,547 $2,812 1,238 $2,250 Net plant and 1,650 1,650 equipment Common equity Common stock $610 328 $488 262 Retained earnings Total common $938 $750 Total assets $3,750 $3,000 equity Total liabilities and equity $3,750 $3,000 , and its current ratio is_ ; Scramouche Opera Company's quick ratio is N&B Equipment Company's quick ratio is , and its current ratio is Which of the following statements are true? Check all that apply. N&B Equipment Company has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than Scramouche Opera Company. O A current ratio of 1 indicates that the book value of the company's current assets is equal to the book value of its current liabilities. An increase in the quick ratio over time usually means that the company's liquidity position is improving and that the company is managing its short-term assets well. N&B Equipment Company has a better ability to meet its short-term liabilities than Scramouche Opera Company. An increase in the current ratio over time always means that the company's liquidity position is improving.

Answer 1

Answer-1:

N&B Equipment Company:

Quick ratio = Quick asset / Current liabilities = ($1,350 - 594) / $1,012 = 0.75

Current ratio = Current asset / Current liabilities = $1,350 / $1,012 = 1.34

Scramouche Opera Company:

Quick ratio = Quick asset / Current liabilities = ($2,100 - 924) / $1,265 = 0.93

Current ratio = Current asset / Current liabilities = $2,100 / $1,265 = 1.66

Answer-2:

First three option are true

Last two option is not true.