2016 = 1.48 times (or 1.48:1) Current ratio in 6/2017 = 1.18 times (or 1.18:1) Current ratio in 6/2018 = 1.33 times (or 1.33:1) Current ratio in 6/2019 = 1.37 times (or 1.37:1) Current ratio in 6/2020 = $2.25 times (or 2.25:1) Required: • Whether the ratios of three companies are favourable or unfavourable • Whether the current ratio will be useful in predicting financial failure in terms of the trends sh
We know the
BHP Group Ltd
Current ratio in 6/2016 = 1.44 times (or 1.44:1)
Current ratio in 6/2017 = 1.85 times (or 1.85:1)
Current ratio in 6/2018 = 2.51 times (or 2.51:1)
Current ratio in 6/2019 = 1.89 times (or 1.89:1)
Current ratio in 6/2020 = 1.45 times (or 1.45:1)
Rio Tinto Ltd
Current ratio in 12/2016 = 1.61 times (or 1.61:1)
Current ratio in 12/2017 = 1.71 times (or 1.71:1)
Current ratio in 12/2018 = 1.98 times (or 1.98:1)
Current ratio in 12/2019 = 1.56 times (or 1.56:1)
Current ratio in 12/2020 = 1.80 times (or 1.80:1)
Fortescue Metals Group Ltd
Current ratio in 6/2016 = 1.48 times (or 1.48:1)
Current ratio in 6/2017 = 1.18 times (or 1.18:1)
Current ratio in 6/2018 = 1.33 times (or 1.33:1)
Current ratio in 6/2019 = 1.37 times (or 1.37:1)
Current ratio in 6/2020 = $2.25 times (or 2.25:1)
Required:
• Whether the ratios of three companies are favourable or unfavourable
• Whether the current ratio will be useful in predicting financial failure in terms of the trends shown?
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