Question

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				$303,600			$229,600
Marketable securities				351,600			258,300
Accounts and notes receivable (net)				143,800			86,100
Inventories				868,600			650,300
Prepaid expenses				447,400			415,700
	Total current assets			$2,115,000			$1,640,000
Current liabilities:
Accounts and notes payable
	(short-term)			$272,600			$287,000
Accrued liabilities				197,400			123,000
	Total current liabilities			$470,000			$410,000

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
1. Working capital	$			$
2. Current ratio
3. Quick ratio

b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in current assets relative to current liabilities.

Answer 1

A
			Current Year	Previous Year		Formula Used
	1	Working Capital	(2115000-470000)	(1640000-410000)		(Current Asset-Current Liabilties)
			1645000	1230000
	2	Current Ratio	(2115000/470000)	(1640000/410000)		(Current Asset/Current Liabilties)
			4.50	4.00
	3	Quick Ratio	(2115000-868600-447400)/470000)	(1640000-650300-415700)/410000)		(Current Asset-Inventories-Prepaid Expense)/Current Liabilties)
			1.70	1.40
B	Improved from Preceeding Year to the Current Year
	All Have Improved
	Increase in Current Assets relative to Current Liabilities