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Question
The current assets and current liabilities for Kolbie Company and Newton Company are as follows at the end of a recent fiscal period:
Kolbie Company (in millions) | Newton Company (in millions) | |
| Current assets: | ||
| Cash and cash equivalents | $ 8,352 | $ 8,546 |
| Short-term investments | 6,034 | 752 |
| Accounts receivable | 3,029 | 5,152 |
| Inventories | 446 | 660 |
| Other current assets* | 2,195 | 2,829 |
| Total current assets | $20,056 | $17,939 |
| Current liabilities: | ||
| Accounts payable | $ 4,970 | $10,430 |
| Accrued and other current liabilities | 3,329 | 6,361 |
| Total current liabilities | $ 8,299 | $16,791 |
*These represent prepaid expenses and other nonquick current assets.
a. Determine the quick ratio for both companies. Round to two decimal places.
b. Interpret the quick ratio difference between the two companies.
Answer
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