Management of Rivers Co. anticipates that its year-end balance sheet will show c

Question

Management of Rivers Co. anticipates that its year-end balance sheet will show current assets of $12,774 and current liabilities of $7,600. Management is considering paying $3,890 of accounts payable before year-end even though payment isn't due until later. Requirement 1: Calculate the firm's working capital and current ratio under each situation: Do Not Prepay Accounts Payable 1. Working Capital?(not prepay) 2. Current Ratio? (Not Pre Pay) Prepay Accounts Payable 1. Working Capital?(Prepay accounts) 2. Current Ratio ?(Prepay accounts)

Explanation / Answer

a)working capital = 12774-7600-3890 = 1284 b) 1284/7600 = 0.169

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