Selected Recent Balance Sheet and Income Statement Information for the Clothing

Essay

Selected recent balance sheet and income statement information for the clothing companies: Coffee Plus and Tea Circle Corporation follows:
$\begin{array}{lcc} & \begin{array}{r}\text { Coffee Plus } \\\text { (in } \$ 000 \text { s) }\end{array} & \begin{array}{r}\text { Tea Circle Corporation } \\\text { (in millions) }\end{array} \\\hline \text { Cash } & \$ 9,758 & \$ 8,250 \\\text { Accounts receivable } & 49,290 & 31,347 \\\text { Inventory } & 478,346 & 32,306 \\\text { Total current liabilities } & 737,601 & 39,645 \\\text { Total liabilities } & 1,340,453 & 127,689 \\\text { Total equity } & 223,209 & 46,041 \\\text { Pre-tax income (loss) } & (177,756) & 13,552 \\\text { Interest expense } & 0 & 2,651\end{array}$
a. Calculate the current ratio and quick ratio for both companies.
b. Which company is more liquid?
c. Calculate the times-interest-earned and debt-to-equity ratios for both companies.
d. Which company is more solvent? Explain.