
It shows whether company will be able to pay their current liabilities out of their current asset or not. It comes after dividing current liabilities from current assets.
Profit Margin Ratio:
It shows how much company is earning for every dollar of their revenue. It comes after dividing net sales from revenue in percentage terms.
1.
a.
Profit margin.
Profit margin.
2.
To explain: Company with better performance on the basis of profit margin.
3.
Current ratio of both companies of both years.
4.
To explain: Which company has the better ability to pay short term obligation.
5.
To explain: Condition of current ratio of both companies for past two years.
6.
To explain: Condition of current ratio of both companies as comparison to industry average.

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Chapter 3 Solutions
Connect 2 Semester Access Card for Financial and Managerial Accounting
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