two companies

same liablities, same equity current ration 2.1 2.1 cash ratio 0.4 0.4 Quick ratio 0.6 0.7 Conclusion A) higher percentage of assets associated with inventory B) higher percentage of assets associated with receivables c) higher percentage of assets associated with marketable securities D) lower percentage of assets assoc. with marketable securities

Be prepared for this question.

company 1 has a lower quick ratio than company 2, must mean company 1 has lower inventoryies. What is yoru question?

it’s not my question pepp :wink:

Well if you dont have question how am i going to pick an answer. The question is asking about company 1 or company 2 actually I’;d pick A anyways. cuz thats the only one w/ inventories.

Both have the same cash ratio, the same percentage of cash and marketable securities associated with current liabilities. One has a lower quick ratio than the other, but both have the same current ratio, that must mean the first has lower accounts receivables and higher inventory, the second has higher accounts receivables and lower inventory.

damn i see the question now. F!@#!@# A!! read this question way to fast. Map you are right.

@pepp: Conclusion is for the first company in comparison to the second


Oops, edited, meant B. Nevermind.

Company A has lower accoutns receivable than company B So I’d say B

lower AR higher Inventory, that’s A.

But which company is the question referring to?

CR: Cash + marketable + Invent+ AR Quick Cash + marketable + AR cash: Cash + marketable IMO, the difference would reseult from AR because that means the difference between the CR and Quick is a result from a difference in Inv & AR. but if you take out the AR, then the companies have the same cash ratio. I still say AR

oh sh^t, just saw the conclusion listed by cfaisok, its A

Yes, I stick to my answer. A. inventory. getting all confused here. Answer is A. My fiorst 2 posts were right… ignore everyhing… just tumbled myself over again.

  1. current= same --> asset/liability=same 2. cash ratio=same --> marketable securitiey in %+ cash%= same 3. different quick ratio quick = (asset - inventory)/liablity --> for company A asset - inventory is lower, so inventory is higher as asset - inventory= cash + short term m i + receivables --> reveivables in A must be lower --> Choose B. That 's my conclusion…

damn, now im confusing myself, I think cfaisok is right final answer!

company A Inventory / Asset > Inventry / Asset company b.

map can you give clearance?