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Given Below Are Three Ratios Calculated for Hall,Link,and Dollar Companies

Question 174

Essay

Given below are three ratios calculated for Hall,Link,and Dollar Companies for 2018 and 2017.

 (in  millions)  Hall  Link  Dollar  Current ratio  December 31,2018 2.8 to 12.3 to 11.8 to 1 December 31,2017 2.0 to 11.5 to 12.2 to 1 Inventory turnover ratio  December 31,2018 6.9 times 5.8 times 8.0 times  December 31,2017 7.6 times 5.8 times 9.6 times  Acid-test ratio  December 31,20182.5 to 12.1 to 10.5 to 1 December 31,20171.0 to 11.4 to 11.2 to 1\begin{array}{|ll|l|l|l|} \hline\text { (in } \text { millions) }&& \text { Hall } & \text { Link } & \text { Dollar } \\\hline \text { Current ratio }&\text { December 31,2018 } & 2.8 \text { to } 1 & 2.3 \text { to } 1 & 1.8 \text { to } 1 \\&\text { December 31,2017 } & 2.0 \text { to } 1 & 1.5 \text { to } 1 & 2.2 \text { to } 1 \\\hline \text { Inventory turnover ratio }&\text { December 31,2018 } & 6.9 \text { times } & 5.8 \text { times } & 8.0 \text { times } \\&\text { December 31,2017 } & 7.6 \text { times } & 5.8 \text { times } & 9.6 \text { times } \\\hline \text { Acid-test ratio }&\text { December } 31,2018 & 2.5 \text { to } 1 & 2.1 \text { to } 1 & 0.5 \text { to } 1 \\&\text { December } 31,2017 & 1.0 \text { to } 1 & 1.4 \text { to } 1 & 1.2 \text { to } 1 \\\hline\end{array} A) Which company has the greatest percentage of inventory and prepaids? How can you tell?
B) Which company appears to be heading in the wrong direction concerning the ability to pay its bills in a very short-run situation? Explain.
C) Which company appears to be the most liquid? Explain.

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