Selected financial data regarding current assets and current liabilities for Ferris Air and Oceanic Airlines are provided as follows:($ in millions) Ferris Air Oceanic AirlinesCurrent assets:Cash and cash equivalents $1,113 $ 2,791Current investments 1,857 958Net receivables 578 2,156Inventory 469 1,023Other current assets 210 1,344Total current assets $4,227 $ 8,272Current liabilities:Current debt $ 271 $ 1,627Accounts payable 2,209 5,686Other current liabilities 2,170 5,957Total current liabilities $4,650 $13,270Required:1. Calculate the current ratio for Ferris Air and Oceanic Airlines. Which company has the better current ratio?2. Calculate the acid-test (quick) ratio for Ferris Air and Oceanic Airlines. Which company has the better acid-test ratio?3. How would the purchase of additional inventory with cash affect the current ratio? How would it affect the acid-test ratio?
Selected financial data regarding current assets and current liabilities for Ferris Air and Oceanic Airlines are provided as follows:
($ in millions) Ferris Air Oceanic Airlines
Current assets:
Cash and cash equivalents $1,113 $ 2,791
Current investments 1,857 958
Net receivables 578 2,156
Inventory 469 1,023
Other current assets 210 1,344
Total current assets $4,227 $ 8,272
Current liabilities:
Current debt $ 271 $ 1,627
Accounts payable 2,209 5,686
Other current liabilities 2,170 5,957
Total current liabilities $4,650 $13,270
Required:
1. Calculate the
2. Calculate the acid-test (quick) ratio for Ferris Air and Oceanic Airlines. Which company has the better acid-test ratio?
3. How would the purchase of additional inventory with cash affect the current ratio? How would it affect the acid-test ratio?
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