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Assume three companies in the same industry have the following quick ratios: Davis Co. = .83 to 1 Edwards Co. = .65 to 1 Fender Co. = .47 to 1 Based on this information alone, which company appears to have the highest liquidity?

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Final answer:

Fender Co. appears to have the highest liquidity based on their quick ratios.

Step-by-step explanation:

To determine which company appears to have the highest liquidity based on their quick ratios, we compare the ratios provided. The quick ratio is calculated by dividing a company's current assets (excluding inventory) by its current liabilities.

Based on the information given, we can conclude that Fender Co. appears to have the highest liquidity because it has the highest quick ratio of 0.47 to 1. This means that Fender Co. has a higher proportion of quick assets to cover its immediate liabilities compared to Davis Co. and Edwards Co.

Davis Co. has a quick ratio of 0.83 to 1, which indicates a lower liquidity position than Fender Co. Edwards Co. has the lowest quick ratio of 0.65 to 1, suggesting that it may have the lowest liquidity among the three companies.

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