Walt Disney Theme Parks and Universal Theme Parks
From the above current ratios, it is evident that Walt Disney Theme Parks and Universal Theme Parks have upright liquidity. However, it is more apparent that Walt Disney Theme Parks have a stronger liquidity capability than Universal Studios Theme Parks since Walt Disney Theme Parks have a current ratio marginally smaller than one while Universal Studios Theme Parks have a current ratio less than one by far.
A quick ratio is an indicator that measures an organization’s position on short-term liquidity, as well as the organization’s ability to settle the short-term liabilities by liquefying the total liquid assets. Altogether, quick ratios are employed to determine a company’s accounts receivable, marketable securities, cash, as well as other current obligations (Babalola & Abiola, 132-137). To calculate quick ratios, cash equivalents, current receivables, cash, and short-term investments are added and then divided by the recorded short-term liabilities.
The close of the 2019 fiscal year had Walt Disney Theme Parks with a quick ratio of 0.69, while Universal Studios Theme Parks had a quick ratio of 0.47. Thus, the industry average quick ratio is recorded at 1.16. From this data shown below (in millions), Disney Theme Parks is more liquid than Universal Studios Theme Parks and thus can resolve their current liabilities with ease than Universal Studios Theme Parks. Such a divergence in the quick ratios between these two organizations is a result of the divergence in their inventories. Therefore, both of these organizations are safe for an added investment on a short-term basis. However, it is entirely unclear which of these organizations is preferable for a short-term equity investment following the posted prepaid assets and inventory values.