Composition of Current Assets
The following schedule summarizes the current assets reported in the year-end balance sheets of Costello Laboratories, a company that develops, manufactures, and markets health care products, and Triangle Air Lines, a major provider of passenger, freight, and mail air transportation:
|
Costello Laboratories
|
Triangle Air Lines
|
|
(Dollars in thousands)
|
|
Current Assets
|
|
|
|
Cash and equivalents
|
$ 300,676
|
$ 1,180,364
|
|
Investment securities
|
78,149
|
-
|
|
Accounts receivable,
|
|
|
|
net of allowance
|
1,336,222
|
1,024,869
|
|
Supplies
|
-
|
90,593
|
|
Inventories
|
940,533
|
-
|
|
Prepaids and other
|
929,955
|
526,094
|
|
Total current assets
|
3,585,535
|
2,821,920
|
|
Noncurrent, total
|
4,103,034
|
9,049,103
|
|
Total assets
|
$7,688,569
|
$11,871,023
|
Required
a. Identify the major differences between these two firms in the composition of current assets. Try to explain these differences in terms of the types of goods and services that each company produces.
b. Based solely on the information provided here, which company appears to be more liquid?