Question

Current Position Analysis The following data were taken from the balance sheet of Bock Suppliers Company:...

Current Position Analysis

The following data were taken from the balance sheet of Bock Suppliers Company:

Current Year Previous Year
Cash $359,100 $264,000
Temporary investments 415,800 297,000
Accounts and notes receivable (net) 170,100 99,000
Inventories 1,205,800 872,300
Prepaid expenses 621,200 557,700
Total current assets $2,772,000 $2,090,000
Accounts and notes payable
(short-term) $365,400 $385,000
Accrued liabilities 264,600 165,000
Total current liabilities $630,000 $550,000

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

Homework Answers

Answer #1
Current year previous year
1. working capital 2,142,000 1,540,000
2.current ratio 4.4 3.8
3.quick ratio 1.5 1.2

working notes:

current year previous year
1.working capital (total current assets - total current liabilities) 2,772,000- 630,000 =>2,142,000 1,540,000
2.current ratio (current assets / current liabilities) (2,772,000/ 630,000)=>4.4 (2,090,000/550,000)=>3.80
3.quick ratio (current assets - inventories - prepaid expenses) / current liabilities (2,772,000-1,205,800-621,200) / 630,000 =>1.5 (2,090,000-872,300-557,700) / 550,000 =>1.2
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