Which of the following choices best describes reasonable conclusions that you might make about the two companies' ability to pay their current and long-term obligations? * Q You observe the following data for the following companies: Company A (Php '000) 4,500 Company B (Php '000) 6,000 1,000 Revenue Net income 50 40,000 100,000 60,000 700,000 Current assets Total assets Current liabilities 10,000 60,000 50,000 150,000 Total debt Shareholders' equity 30,000 500,000 Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only 1.2, but Company B is more solvent, as indicated by its lower debt-to- equity ratio. Company A's current ratio of 0.25 indicates it is less liquid than Company B, whose current ratio is 0.83, and O Company A is also less solvent, as indicated by a debt-to-equity ratio of 200 percent compared with Company B' debt-to-equity ratio of only 30 percent. Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only 1.2, and O Company A is also more solvent, as indicated by a debt-to-equity ratio of 200 percent compared with Company B's debt-to-equity ratio of only 30 percent.

Which of the following choices best describes reasonable conclusions that you might make about the two companies' ability to pay their current and long-term obligations? * Q You observe the following data for the following companies: Company A (Php '000) 4,500 Company B (Php '000) 6,000 1,000 Revenue Net income 50 40,000 100,000 60,000 700,000 Current assets Total assets Current liabilities 10,000 60,000 50,000 150,000 Total debt Shareholders' equity 30,000 500,000 Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only 1.2, but Company B is more solvent, as indicated by its lower debt-to- equity ratio. Company A's current ratio of 0.25 indicates it is less liquid than Company B, whose current ratio is 0.83, and O Company A is also less solvent, as indicated by a debt-to-equity ratio of 200 percent compared with Company B' debt-to-equity ratio of only 30 percent. Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only 1.2, and O Company A is also more solvent, as indicated by a debt-to-equity ratio of 200 percent compared with Company B's debt-to-equity ratio of only 30 percent.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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