The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash Marketable securities Accounts and notes receivable (net) Inventories Prepaid expenses Total current assets Current liabilities: Accounts and notes payable (short-term) Accrued liabilities Total current liabilities $310,100 359,000 146,900 570,200 293,800 $1,680,000 1. Working capital 2. Current ratio 3. Quick ratio $278,400 201,600 $480,000 $ $252,000 283,500 94,500 358,700 229,300 $1,218,000 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 $294,000 126,000 $420,000
The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash Marketable securities Accounts and notes receivable (net) Inventories Prepaid expenses Total current assets Current liabilities: Accounts and notes payable (short-term) Accrued liabilities Total current liabilities $310,100 359,000 146,900 570,200 293,800 $1,680,000 1. Working capital 2. Current ratio 3. Quick ratio $278,400 201,600 $480,000 $ $252,000 283,500 94,500 358,700 229,300 $1,218,000 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 $294,000 126,000 $420,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1 Introduction
Working Capital :— It is the difference between current assets and current liabilities.
Current Ratio :— It is the ratio between current assets and current liabilities.
Quick Ratio :— It is the ratio between quick assets and current liabilities.
Quick Ratio
= (Current Assets — Inventory — Prepaid expenses)/Current Liabilities
Or
= (Cash + Accounts Receivable + Marketable securities)/Current Liabilities
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