Question

Brief Exercise 195

These selected condensed data are taken from a recent balance sheet of Blossom Company (in millions of dollars).

Cash		$8.2
Accounts receivable		21.5
Inventory		19.0
Other current assets		11.1
Total current liabilities		$26.0

Additional information: Current liabilities at the beginning of the year were $35.8 million.

What is the working capital? (Enter answer in millions. Round answer to 1 decimal places, e.g. 15.5.)

Working capital

$enter the working capital in millions of dollars

What is the current ratio? (Round answer to 2 decimal places, e.g. 15.25.)

Current ratio

enter the current ratio rounded to 2 decimal places :1

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Answer 1

Working capital = Current assets - Current liabilities
Current assets = (Cash + Accounts receivable + Inventory + other current assets)
=> ($8.2 + $21.5 + $19.0 + $11.1)
=> $59.8
Current liabilities = $26.0
So, Working capital = ($59.8 - $26.0)
=> $33.8 millions or $33,800,000 (Ans)

Current ratio = (Current assets / Current liabilities)
So, Current ratio = ($59.8 / $26.0)
=> 2.30 (Ans)

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