For Taylor Corporation, the working capital at the end of the current year is $1
ID: 2827416 • Letter: F
Question
For Taylor Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows:
Year 2
Year 1
Current assets:
Cash, marketable securities, and receivables
$ 80,000
$ 84,000
Inventories
120,000
66,000
Total current assets
$200,000
$150,000
Current liabilities
100,000
60,000
Working capital
$100,000
$ 90,000
Has the current position of Taylor Corporation improved? Explain
Year 2
Year 1
Current assets:
Cash, marketable securities, and receivables
$ 80,000
$ 84,000
Inventories
120,000
66,000
Total current assets
$200,000
$150,000
Current liabilities
100,000
60,000
Working capital
$100,000
$ 90,000
Explanation / Answer
current ratio in Year 1 = 150/60 = 2.5
current ratio in Year 2 = 200/100 = 2
so the current ratio has decline indicating weakening in liquidity
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