ACC501 GDB Discussion and Solution fall 2010

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Answer
Net Working Capital = Current Assets - Current Liabilities
Company A = 40000 - 20000 = 20000
Company B = 90000 - 80000 = 10000
On liquidity term Company A is better than Company B
Liquidity Ratio = Current Assets / Current Liabilities
Liquidity Ratio A = 40000/20000 = 2
Liquidity Ratio B = 90000/80000 = 1.125
Answer is :- A

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