1. Assume that one of your classmates states that a company’s books should be ongoing and therefore not closed until that business is terminated. Write a half page memo to this classmate explaining the concept of the closing process by drawing analogies between (1) a scoreboard for an athletic event and the revenue and expense accounts of a business or (2) a sports team’s record book and the capital account.
2. CAccess Motley Fool’s discussion of the current ratio.
Required
1. What level for the current ratio is generally regarded as sufficient to meet near term operating needs?
2. Once you have calculated the current ratio for a company, what should you compare it against?
3. What are the implications for a company that has a current ratio that is too high?