Information for two companies in the same industry, Hoyt Corporation and Rex Corporation, is presented here.
|
Cash provided by operating activities |
Hoyt |
Rex |
|
Average current liabilities |
$100,000 |
$100,000 |
|
Average total liabilities |
50,000 |
100,000 |
|
Net earnings |
200,000 |
250,000 |
|
Capital expenditures |
200,000 |
200,000 |
|
Dividends paid |
40,000 |
70,000 |
|
5,000 |
10,000 |
Instructions
Using the cash based measures presented in this chapter, compare the (a) liquidity and (b) solvency of the two companies.