4. Current Position Analysis The following data were taken from the balance shee

Question

4.

Current Position Analysis

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

Current Year Previous Year Current assets:   Cash $356,400 $278,400   Marketable securities 412,700 313,200   Accounts and notes receivable (net) 168,900 104,400   Inventories 1,149,700 849,100   Prepaid expenses 592,300 542,900   Total current assets $2,680,000 $2,088,000 Current liabilities:   Accounts and notes payable   (short-term) $388,600 $406,000   Accrued liabilities 281,400 174,000   Total current liabilities $670,000 $580,000 Onelogin News | Dashboard CengageNOWv2 x C Chegg Study | Guide C Chegg Study | Guide ? ? ? ? ? v2 cengagenow con intake ssignment takeAssignmen Main doi voker-assignments& takeAssignmentSessionLoca or-assignment t ? ? ? ? Ch 17-3 Exercises and Problems eBook Show Me How Calculator Print Item Accounts and notes receivable (net) Inventories Prepaid expenses 168,900 1,149,700 592,300 $2,680,000 104,400 849,100 542,900 $2,088,000 1. EX.17-01.ALGO 2. EX.17-04.ALGO Total current assets 3. EX.17-05.ALGO Current liabilities: 4. EX. 17-06. ALGO Accounts and notes payable $388,600 281,400 $670,000 $406,000 174,000 $580,000 (short-term) 5. EX.17-19.ALGO Accrued liabilities 6. EX.17-20.ALGO 7. EX.17-21.ALGO 8. PR.17-04.ALGO Total current liabilities 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 capital, current ratio, and quick ratio have all from the preceding year to the current year. The working Most of these changes are the result of an in current assets relative to current liabilities Check My Work 2 more Check My Work uses remaining PrevioUS Next Type here to search 2:40 AM 4/20/2018 25

Explanation / Answer

Working Capital = Current Assets - Current Liabilities

Current Ratio = Current Assets / Current Liabilities

Quick Ratio = (Current Assets - Inventories - Prepaid expenses) / Current Liabilities

So the final answers are as follows:

Particulars Current Year Previous Year Current Assets (A) $2,680,000 $2,088,000 Current Liabilities (B) $670,000 $580,000 Working Capital (A-B) $2,010,000 $1,508,000 Current Ratio (A/B) 4 3.6

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