The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previou
s Year Current assets: Cash $391,000 $300,000 Marketable securities 515,000 354,000 Accounts and notes receivable (net) 634,000 426,000 Inventories 368,000 222,000 Prepaid expenses 182,000 138,000 Total current assets $2,090,000 $1,440,000 Current liabilities: Accounts and notes payable (short-term) $725,000 $600,000 Accrued liabilities 275,000 300,000 Total current liabilities $1,000,000 $900,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year 1. Working capital $ $ 2. Current ratio 3. Quick ratio b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in
2 answers:
Answer:
1) Working Capital = A-B 1,090,000.00 540,000.00
2Current Ratio = Current Asset/Current Libilities = A/B
Equals 1.9:1 2.7:1
3) 1.5:1 1.2:1
Explanation:
Prev Year Current Year
Cash 391,000.00 300,000.00
MKt Securities 515,000.00 354,000.00
Account Rec 634,000.00 426,000.00
Inventories 368,000.00 222,000.00
Prep Exp 182,000.00 138,000.00
A = Total Current Assets 2,090,000.00 1,440,000.00
C = Quick Assets = Cash + Marketable Securities + Account Receivable 1,540,000.00 1,080,000.00
Account Payable 725,000.00 600,000.00
Accrued 275,000.00 300,000.00
B = total Current Liabilities 1,000,000.00 900,000.00
Working Capital = A-B 1,090,000.00 540,000.00
Current Ratio = Current Asset/Current Libilities = A/B 1.92 2.67
Equals 1.9:1 2.7:1
Quick Assets Ratio Quick Assets/ Current Liabilities = C/B 1.54 1.20
= 1.5:1 1.2:1
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