Calculate current ratio andworking capital for3RT r 2016 and 2017TR undcurrenn t

Question

Calculate current ratio andworking capital for3RT r 2016 and 2017TR undcurrenn th to toy deci ar aces, e o rynrr e PRINTER VERSTON ma Current ratio w at gea ndi e l 20161.6 2017 Working capital 2016 2017 3739 million 6170 mittion SHoW SOLUTION SHOW ANSWER LINK TO TEXT Attempts: 1 of 2 used (b) current ratio to 2 decimal places, e Current ratio t used $192 millión cash to pay ofr $192 million of accounts payable. How would its current ratio and working 1.25 : 1. Enter working capital answer to minion Working captal million LINK TO TEXT

Explanation / Answer

2017:

Current Assets/Current liabilities = 2.26

Current Assets = 2.26*Current liabilities .........equation (1)

Working capital = 6170

Current assets - Current liabilities = 6170

Putting the value of current assets from equation 1:

2.26Current liabilities - Current liabilities = 6170

1.26 Current liabilities= 6170

Current liabilities = 6170/1.26 = 4896.83

Current assets= 4896.83+6170 = 11066.83

Revised Current assets = 11066.83- 192 = 10874.83

Revised Current liabilities = 4896.83 - 192 = 4704.83

Current ratio = Revised Current assets/Revised Current liabilities = 10874.83/4704.83 = 2.31:1

Working capital = Revised Current assets - Revised Current liabilities = 10874.83 - 4704.83 = 6170

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