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Working Capital and Current Ratio Balance sheet data for HQ Properties Company follows:    2016    2015 Current...

Working Capital and Current Ratio

Balance sheet data for HQ Properties Company follows:

   2016    2015
Current assets $2,175,000 $1,900,000
Current liabilities 1,500,000 1,250,000

a. Determine the working capital and current ratio for 2016 and 2015. If required, round "current ratio" answers to two decimal places.

2016 2015
Working capital $ $
Current ratio

b. Does the change in the current ratio from 2015 to 2016 indicate a favorable or an unfavorable trend?

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Answer #1
a) Working capital = total current assets- total current liabilities
current ratio = total current assets/total current liabilities
2016 2015
Current assets 2,175,000 1,900,000
Current liabilities 1,500,000 1,250,000
working capital 675,000 650,000
current ratio 1.45 1.52
b) Unfavoruable trend since current ratio decreased from last year
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