Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 3.20P
Problem 3.20
LO 6
Calculate and analyze liquidity measures Following are the current asset and current liability sections of the balance sheets for Calketch, Inc., at August 31, 2017 and 2016 (in millions):
| Current Assets | August 31, 2017 | August 31, 2016 |
| Cash | $ 9 | $ 18 |
| Marketable securities | 21 | 30 |
| 46 | 24 | |
| Inventories | 67 | 45 |
| Total current assets |
Current Liabilities
Required:
- Calculate the
working capital andcurrent ratio at eachbalance sheet date. Round your current ratio answers to one decimal place. - Describe the change in the firm’s liquidity from 2016 to 2017.
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Students have asked these similar questions
Problem 11-12 (Algo) Effect of transactions on liquidity measures LO 1
Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows:
Cash
$
48,000
Marketable securities
135,000
Accounts receivable, net
165,000
Inventory
187,500
Prepaid expenses
21,000
Total current assets
$
556,500
Accounts payable
$
108,000
Other accrued liabilities
26,400
Short-term debt
48,000
Total current liabilities
$
182,400
Required:
Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019.
Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect.
Credit sales for the year amounted to…
Problem 11-12 (Algo) Effect of transactions on liquidity measures LO 1
Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows:
Cash
$
48,000
Marketable securities
135,000
Accounts receivable, net
165,000
Inventory
187,500
Prepaid expenses
21,000
Total current assets
$
556,500
Accounts payable
$
108,000
Other accrued liabilities
26,400
Short-term debt
48,000
Total current liabilities
$
182,400
Required:
Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019.
Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect.
Credit sales for the year amounted to…
2016
300
2017
750
Category
Accounts payable
Accounts receivable
Accruals
900
825
450
300
??
1,500
1,200
1,050
??
Cash
1,500
1,100
Common Stock
COGS
Depreciation expense
??
2,250
120
2,700
150
Gross fixed assets
Interest expense
Inventories
1,125
1,650
2,250
750
Long-tam debt
Net fixed assets
1,500
1,875
825
Notes payable
Operating expenses (excl. depr.)
Retained eamings
690
300
225
750
850
Sales
1,950
2,250
Taxes
90
120
The firm's Return on Equity (ROE) for 2017 is
18.20%
21.49%
24.89%
27.45%
30.85%
Chapter 3 Solutions
Accounting: What the Numbers Mean
Ch. 3 - Prob. 3.1MECh. 3 - Mini-Exercise 3.2 LO 3 ROI analysis using the...Ch. 3 - Mini-Exercise 3.3 LO 4 Calculate ROE Firm L had...Ch. 3 - Prob. 3.4MECh. 3 - Mini-Exercise 3.5 LO 6 Calculate current...Ch. 3 - Mini-Exercise 3.6 LO 6 Calculate working capital...Ch. 3 - Exercise 3.7 LO 2 Compare investment alternatives...Ch. 3 - Prob. 3.8ECh. 3 - Exercise 3.9 LO 2 Compare investment alternatives...Ch. 3 - Exercise 3.10 LO 2 Compare investment alternatives...
Ch. 3 - Exercise 3.11 LO 3 ROI analysis using the DuPont...Ch. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Exercise 3.15 LO 6 Effect of transactions on...Ch. 3 - Exercise 3.16 LO 6 Effect of transactions on...Ch. 3 - Calculate profitability measures using annual...Ch. 3 - Prob. 3.18PCh. 3 - Problem 3.19 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.20 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.21 LO 3 Applications of ROI using the...Ch. 3 - Prob. 3.22PCh. 3 - Case 3.23 LO 3. 4, 6, 2 Focus company-analysis of...Ch. 3 - Case 3.24 LO 3, 4, 6, 7 Analysis of liquidity' and...
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