Question

Roy’s Toys is a manufacturer of toys and children’s products. The following are selected items appearing...

Roy’s Toys is a manufacturer of toys and children’s products. The following are selected items appearing in a recent balance sheet. Cash and short-term investments $ 47 Receivables 156 Inventories 77 Prepaid expenses and other current assets 35 Total current liabilities 134 Total liabilities 203 Total stockholders' equity 347 Dollar amounts stated above are in millions. a-1. Using the information above, compute the amounts of Roy's Toys quick assets. (Enter your answer in millions of dollars.) a-2. Using the information above, compute the amounts of Roy's Toys total current assets. (Enter your answer in millions of dollars.) b-1. Compute for Roy's Toys quick ratio. (Round your answer to 1 decimal place.) b-2. Compute for Roy's Toys current ratio. (Round your answer to 1 decimal place.) b-3. Compute for Roy's Toys dollar amount of working capital. (Enter your answer in millions of dollars.)

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Answer #1

a1) quick assets =$203 millions

a2)current assets =$315 millions

b1)Quick ratio =1.5

b2)Current ratio =2.4

b3) working capital =$181

Explanation

a 1 ) calculation of quick assets of toys toys

Quick assets in millions of dollars
Cash and short term investment $47
Receivables 156
Total quick assets $203

a2) calculation of total current assets

Current assets in millions of dollars
Cash and short term investment $47
Receivables 156
Inventory 77
Prepaid expense 35
Total current assets $315

b1)calculation of quick ratio

Quick ratio = quick assets /current liabilities

=$203/134= 1.5

b2) calculation of current ratio = current assets /current liabilities

=$315/134

=2.4

Working capital = current assets -current liabilities

$15-134=$181

Note : When you calculate quick assets no need to take inventory and prepaid expenses .they are not quick assets

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