Calculate the current ratio for each company for the past two years. Which company has the stronger ratio.
Use the audited financial statements
- What was the original cost of Property, Plant and Equipment for each company? How much depreciation has been recorded over the life of the assets? Based on this information only, which company’s asset are most likely older?
- Calculate the current ratio for each company for the past two years. Which company has the stronger ratio? Are you concerned about liquidity at either company? Why?
- What is the par value per share of each company’s stock? How many shares were outstanding as of the most recent balance sheet date? Does either company show a balance for treasury stock? Where did you look to answer these questions?
- Which method, direct or indirect, does each company use to prepare the Operating Activities section? How can you tell? (4 points)