(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, and debt to equity ratio, and more.
To Compute: The current ratio for the Company B.
To Compute: The current ratio for the Company BN.
(b)
To Compute: The debt to asset ratio for Company B.
To Compute: The debt to asset ratio for Company B.
To Compute: The times interest earned ratio for the Company B.
To Compute: The times interest earned ratio for the Company BN.
(c)
To Discuss: The relative liquidity and solvency of Company B and BN.
To identify: Is the Company B looks like bankruptcy.
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