The Least Square method provides a concise representation of the relationship between variables which can further help the analysts to make more accurate predictions. The Least Square method assumes that the data is evenly distributed and doesn’t contain any outliers for deriving a line of best fit. But, this method doesn’t provide accurate results for unevenly distributed data or for data containing outliers. Let us have a look at how the data points and the line of best fit obtained from the Least Square method look when plotted on a graph. The primary disadvantage of the least square method lies in the data used. One of the main benefits of using this method is that it is easy to apply and understand.…

Here, the company could withstand a liquidity shortfall if providers of debt financing see the core operations are intact and still capable of generating consistent cash flows at high margins. The Current Ratio is a measure of a company’s near-term liquidity position, or more specifically, the short-term obligations coming due within one year. Public companies don't report their current ratio, though all the information needed to calculate the ratio is contained in the company's financial statements. Even from the point of view of creditors, a high current ratio is not necessarily a safeguard against non-payment of debts. By contrast, in the case of Company Y, 75% of the current assets are made up of these two liquid resources. While determining a company’s…