1. Liquidity ratios. Edison Stagg and Thornton have the following financial information at the close of business on July 10:Edison Stagg ThorntonCash $6000 $5000 $4000Short-term investments 3000 2500 2000Accounts receivable 2000 2500 3000Inventory 1000 2500 4000Prepaid expenses 800 800 800Accounts payable 200 200 200Notes payable: short-term 3100 3100 3100Accrued payables 300 300 300Long-term liabilities 3800 3800 3800a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
