Chapter 8, Problem 8.9AP

Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows:

($ in millions)	ACME Corporation	Wayne Enterprises
Current assets:
Cash and cash equivalents	$ 2,494	$ 541
Current investments		125
Net receivables	1,395	217
Inventory	10,710	8,600
Other current assets	773	301
Total current assets	$15,372	$9,784
Current liabilities
Current debt	$ 1,321	$ 47
Accounts payable and accrued liabilities	8,871	5,327
Other current liabilities	1,270	2,334
Total current liabilities	$11,462	$7,708

  Required:

  1.    Calculate the current ratio for ACME Corporation and Wayne Enterprises. Which company has the better ratio?

  2.    Calculate the acid-test (quick) ratio for ACME Corporation and Wayne Enterprises. Which company has the better ratio?

  3.    How would the purchase of additional inventory on credit affect the current ratio? How would it affect the acid-test ratio?