The following data were taken from the balance sheet of Nilo Company at the end
ID: 2414601 • Letter: T
Question
The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:
a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
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.
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 $400,000Explanation / Answer
a.
Working:
b. The liquidity of Nilo has increased from the preceding year to the current year. The working capital, current ratio, and quick ratio have all increased. Most of these changes are the result of an increase in current assets relative to current liabilities.
Current Year Previous Year 1. Working capital $1,656,000 $1,240,000 2. Current ratio 4.6 4.1 3. Quick ratio 1.7 1.4Related Questions
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