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art44

  • 3 years ago

Company A has current assets of $42 billion and current liabilities of $31 billion. Company B has current assets of $2.7 billion and current liabilities of $1.8 billion. Which of the following statements is correct, based on this information? (Points : 1) Company A is less likely than Company B to have sufficient working capital to meet its short-term needs. Company A has greater leverage than Company B. Company A has less leverage than Company B. Company A and Company B have roughly equivalent enterprise values

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  1. order
    • 3 years ago
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    I would go with option 2 This is because, company A has more current assets than current liabilities, and so it would have sufficient working capital to meet its short-term needs. It's borrowing more than company B, so therefore has more leverage. And company A seems to be earning more than Comany B, but you can't tell by just current assets and liablities alone.

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