(a)
Liquidity ratio measures the short-term capacity of a company to pay its maturing obligations and to meet unanticipated requirements for cash. Liquidity ratios are
Solvency ratio
Solvency ratio measures the capacity of a company to sustain over a long period of time. Solvency ratios are debt to assets ratio, time interest earned ratio, debt to equity ratio, and more.
To Calculate: The working capital and current ratio of Company H and Company HD.
To Discuss: The relative liquidity of company H and HD.
(b)
To Compute: The debt to asset ratio and Times interest earned ratio for Company H and Company HD.
To Discuss: The relative solvency of Company H and Company HD.
(c)
To Compute: The return on assets and profit margin of Company H and Company HD.
To Discuss: The relativity profitability of Company H and Company HD.
(d)
To Discuss: The debt to assets ratio before and after lease obligations of Company HD.
To Discuss: The implications of operating lease obligations.
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