Correlation in Accounting. A company's current ratio measures its ability to pay its short-term obligations. Use the data in the table, which contains a random sample of large technology companies in 2010, for Exercises 50–56. Total assets and total liabilities are in billions of dollars.
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| Company | Current ratio |
Price- earnings ratio |
Assets | Liabilities |
|---|---|---|---|---|
| Microsoft | 1.82 | 12.51 | 77.9 | 38.3 |
| Intel | 2.79 | 18.44 | 53.1 | 11.4 |
| Dell | 1.28 | 10.95 | 33.7 | 28.0 |
| Apple | 1.88 | 24.57 | 53.9 | 26.0 |
| 10.62 | 18.87 | 40.5 | 4.5 |
Table 4.30: Source: Lexis Nexis.
Question 4.55
accountingcorr
55. Provide and interpret a scatterplot of net worth versus current ratio.
4.1.55
The current ratio of a company and the company's net worth have a positive linear relationship.