Briefly compare the two companies for each ratio. Overall, which company is doing better? Why?

Google and Yahoo: Financial Performance

Company A: Quick ratio = .75, Current ratio = 2.0
Company B: Quick ratio = 1.2, Current ratio = 1.5
In general, Company B does better than Company C based solely on these ratios. The quick ratio measures a company’s ability to pay off its current liabilities with assets that can be converted into cash quickly. In this example, Company B’s quick ratio is 1.2 as opposed to Company A’s 0.75. It shows that Company B can better cover its immediate obligations because they have liquid assets readily available.

The current ratio looks at a company’s overall liquidity and measures its ability to meet financial obligations using both its current assets and liabilities. This time, the score for Company B is higher at 1.5 as compared to Company A’s 2. It shows that Company B can cover short-term obligations and has enough funds to carry out other business activities such as marketing or inventory purchases.