BUSN 1010 – Business Enterprise
Financial Analysis Assignment
Potz and Pans, a small gift shop, has current assets of $45,000
(including inventory valued at $30,000) and $9,000 in current
liabilities. Wannabees, a specialty clothing store has current assets of
$150,000 (including inventory valued at $125,000) and $85,000 in
current liabilities. Both business have applied for loans.
1) Calculate and present the current ratio for each company. Which
company is more likely to get the loan? Why?
2) The acid test ratio subtracts the value of the firm's inventory from
its total current assets. Because inventory is often difficult to sell, this
ratio is considered an even more reliable measure of a business's