Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
14th Edition
ISBN: 9781337802000
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 4ADM
Google and Microsoft:
Google, Inc. and Microsoft Corporation design and distribute consumer and enterprise software, including overlaps in search, business productivity, and mobile operating systems. Google’s primary source of revenue is from advertising, while Microsoft’s is from software subscription and support fees. The following year-end data (in millions) were taken from recent
| Microsoft | ||||
| Year 2 | Year 1 | Year 2 | Year 1 | |
| Current assets | $114,246 | $101,466 | $72,886 | $80,685 |
| Current liabilities | 45,625 | 37,417 | 15,908 | 16,805 |
A. Compute the
B. Which company has the larger working capital at the end of Year 2?
C. Is working capital a good measure of relative liquidity in comparing the two companies? Explain.
D. Compute the current ratio for both companies. (Round to one decimal place.)
E. Which company has the larger relative liquidity based on the current ratio?
F. Based on your analysis, comment on the short-term debt-paying ability of these two companies.
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Chapter 4 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
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