The most recent data from the annual balance sheets of Free Spirit Industries In

Question

The most recent data from the annual balance sheets of Free Spirit Industries Inc. and Scramouche Opera Company are as follows: Balance Sheet December 31st Millions of dollars) Scramouche Free Spirit Scramouche Free Spirit Opera Company Industries Opera Company Industries Inc. Inc. Assets Liabilities Current assets Current liabilities Cash Accounts receivable Inventories $5,453 1,995 5,852 13,300 $3,505 1,283 3,762 8,550 Accounts payable Accruals Notes payable $0 1,202 6,813 8,015 9,797 17,812 $0 Total current assets Net fixed assets Net plant and equipment 6,412 6,412 7,838 14,250 Total current liabilities Long-term bonds 10,450 10,450Total debt Common equity Common stock 3,860 2,078 5,938 23,750 3,088 1,662 4,750 19,000 Retained earnings Total common equity Total liabilities and equity Total assets 23,750 19,000 Free Spirit Industries Inc.'s quick ratio is , and its current ratio is ; Scramouche Opera Company's quick ratio is , and its current ratio is

Explanation / Answer

Scramouche Opera Company:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $13,300 / $8,015
Current Ratio = 1.66

Quick Ratio = (Current Assets - Inventories) / Current Liabilities
Quick Ratio = ($13,300 - $5,852) / $8,015
Quick Ratio = 0.93

Free Spirit Industries Inc.:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $8,550 / $6,412
Current Ratio = 1.33

Quick Ratio = (Current Assets - Inventories) / Current Liabilities
Quick Ratio = ($8,550 - $3,762) / $6,412
Quick Ratio = 0.75

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