Question

Company A has current assets of $42 billion and current liabilities of $31 billion.
Company B has current assets of $2.7 billion and current liabilities of $1.8 billion.

Which of the following statements is correct, based on this information? (Points : 1)
Company A is less likely than Company B to have sufficient working capital to meet its short-term needs.
Company A has greater leverage than Company B.
Company A has less leverage than Company B.
Company A and Company B have roughly equivalent enterprise values

Answer 1

I would go with option 2

This is because, company A has more current assets than current liabilities, and so it would have sufficient working capital to meet its short-term needs.

It's borrowing more than company B, so therefore has more leverage.

And company A seems to be earning more than Comany B, but you can't tell by just current assets and liablities alone.