Chapter 5, Problem 14E

To determine

Concept Introduction:

Current Ratio:

The current ratio can be defined as the ratio of total current assets to total current liabilities. A current ratio is a measures that a company's ability to pay long-term and short term obligations. A current ratio is calculated as under −

  $\text{Current ratio =}\frac{\text{Total current assets}}{\text{Total current liabilities}}$

Acid-test Ratio:

Acid-test ratio is calculated by dividing quick assets by current liabilities. The quick assets include all current assets except prepaid expenses and inventories.

To compute:

The current ratio and acid-test ratio for Camaro, GTO and Torino