The following information was drawn from the balance sheets of the Kansas and Montana companies: Kansas Montana Current assets $
59,000 $ 78,000 Current liabilities 40,000 43,000 Required a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills
a. Current Ratio = Current Assets/ Current liabilities
Kansas Current Ratio;
= 59,000 / 40,000
= 1.48
Montana Current Ratio
= 78,000 / 43,000
= 1.81
b. MONATANA is most likely.
The Current ratio is used to calculate the amount to which a company can pay off its current liabilities using its current assets. Montana has a higher Current ratio so they are most likely.
D. is not sending a strong message to investors and creditors that it has the ability to repay its short-term debt
Explanation:
The cash ratio helps measure the liquidity of the company as it shows if it can cover its short-term debt with the cash aand cash equivalents it has. When the ratio is less than 1, as in this case, it means that the company doesn't have enough cash to cover the short-term debt.
Based on the information provided within the question it can be said that the aspect that is being mentioned is known formally as Market Access. This term refers to the process of making sure that anyone who may benefit has fast and easy access to the brands that are being sold and at the correct price, and that there are no unfair restrictions being imposed.
