ACTG 2011 Study Guide - Midterm Guide: Asset, Operating Cash Flow, Net Profit
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The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:
Current Year | Previous Year | |||||||
Current assets: | ||||||||
Cash | $297,200 | $224,000 | ||||||
Marketable securities | 344,100 | 252,000 | ||||||
Accounts and notes receivable (net) | 140,700 | 84,000 | ||||||
Inventories | 880,400 | 658,800 | ||||||
Prepaid expenses | 453,600 | 421,200 | ||||||
Total current assets | $2,116,000 | $1,640,000 | ||||||
Current liabilities: | ||||||||
Accounts and notes payable | ||||||||
(short-term) | $266,800 | $280,000 | ||||||
Accrued liabilities | 193,200 | 120,000 | ||||||
Total current liabilities | $460,000 | $400,000 |
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 current assets relative to current liabilities.