A liquid asset can be converted to cash quickly without significantly impacting the asset’s value. Which of the following asset classes is generally considered to be the most liquid? Inventories Cash Accounts receivable The most recent data from the annual balance sheets of N&B Equipment Company and Jing Foodstuffs Corporation are as follows: Balance Sheet December 31st31st (Millions of dollars) Jing Foodstuffs Corporation N&B Equipment Company Jing Foodstuffs Corporation N&B Equipment Company Assets Liabilities Current assets Current liabilities Cash $574 $369 Accounts payable $0 $0 Accounts receivable 210 135 Accruals 127 0 Inventories 616 396 Notes payable 717 675 Total current assets $1,400 $900 Total current liabilities $844 $675 Net fixed assets Long-term bonds 1,031 825 Net plant and equipment 1,100 1,100 Total debt $1,875 $1,500 Common equity Common stock $406 $325 Retained earnings 219 175 Total common equity $625 $500 Total assets $2,500 $2,000 Total liabilities and equity $2,500 $2,000 N&B Equipment Company’s current ratio is _______ , and its quick ratio is ; Jing Foodstuffs Corporation’s current ratio is , and its quick ratio is . Note: Round your values to four decimal places. Which of the following statements are true? Check all that apply. Jing Foodstuffs Corporation has a better ability to meet its short-term liabilities than N&B Equipment Company. If a company’s current liabilities are increasing faster than its current assets, the company’s liquidity position is weakening. An increase in the quick ratio over time usually means that the company’s liquidity position is improving and that the company is managing its short-term assets well. Compared to N&B Equipment Company, Jing Foodstuffs Corporation has less liquidity and a lower reliance on outside cash flow to finance its short-term obligations. An increase in the current ratio over time always means that the company’s liquidity position is improving.

A liquid asset can be converted to cash quickly without significantly impacting the asset’s value. Which of the following asset classes is generally considered to be the most liquid? Inventories Cash...

A liquid asset can be converted to cash quickly without significantly impacting the asset’s value.

Which of the following asset classes is generally considered to be the most liquid?

Inventories

Cash

Accounts receivable

The most recent data from the annual balance sheets of N&B Equipment Company and Jing Foodstuffs Corporation are as follows:

Balance Sheet December 31st31st (Millions of dollars)

	Jing Foodstuffs Corporation	N&B Equipment Company		Jing Foodstuffs Corporation	N&B Equipment Company
Assets			Liabilities
Current assets			Current liabilities
Cash	$574	$369	Accounts payable	$0	$0
Accounts receivable	210	135	Accruals	127	0
Inventories	616	396	Notes payable	717	675
Total current assets	$1,400	$900	Total current liabilities	$844	$675
Net fixed assets			Long-term bonds	1,031	825
Net plant and equipment	1,100	1,100	Total debt	$1,875	$1,500
			Common equity
			Common stock	$406	$325
			Retained earnings	219	175
			Total common equity	$625	$500
Total assets	$2,500	$2,000	Total liabilities and equity	$2,500	$2,000

N&B Equipment Company’s current ratio is _______ , and its quick ratio is ; Jing Foodstuffs Corporation’s current ratio is , and its quick ratio is . Note: Round your values to four decimal places.

Which of the following statements are true? Check all that apply.

Jing Foodstuffs Corporation has a better ability to meet its short-term liabilities than N&B Equipment Company.

If a company’s current liabilities are increasing faster than its current assets, the company’s liquidity position is weakening.

An increase in the quick ratio over time usually means that the company’s liquidity position is improving and that the company is managing its short-term assets well.

Compared to N&B Equipment Company, Jing Foodstuffs Corporation has less liquidity and a lower reliance on outside cash flow to finance its short-term obligations.

An increase in the current ratio over time always means that the company’s liquidity position is improving.

Jun 09, 2022

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