Required information The following information applies to the questions displayed below Edward Allen Interiors Inc. is...

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Assume that the following events occurred in the following quarter. a Paid $35 cash for additional inventory b. Issued additi

1-b. Based on the above calculation and analysis of TripAdvisors current ratio 4.73, indicate which company is in a better p

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Answer 1

Answer #1

Current ratio prior to the above transactions will be calculated using formula

Current Ratio = Current Assets / Current Liabilities
= (Accounts Receivable + Cash + Inventory + Prepaid Rent) / (Accounts Payable + Notes Payable Short term + Salaries and Wages Payable)
= (30 + 140 + 176 + 32) / (132 + 2 + 40)
= 378 / 174
= 2.17

On comparison with TripAdvisor with current ratio 4.73, we find that TripAdvisor has comparatively better ratio. TripAdvisor is in a better position to pay liabilities.

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Answer 2

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