1st square: Deteriorated or improved. 2nd square: deteriorated or improved 3rd s

Question

1st square: Deteriorated or improved.

2nd square: deteriorated or improved

3rd square: decreased or increased

4th square: strong or weak

5th square: is not troublesome and still falls below the normal range or is troublesome and falls above the normal range.

Requirement 2. Calculate Steamy Spring's net working capital, current ratio, and debt ratio at January 31, 2018, rounding to two decimal places. At January 31, 2017, net working capital was $21,700, the current ratio was 1.85, and the debt ratio was 0.15. Did Steamy Spring's ability to pay both current and total debts improve or deteriorate during the fiscal year? Evaluate Steamy Spring's debt position as strong or weak and give your reason. Compute Steamy Spring's net working capital at January 31, 2018. Total current assets Total current liabilities Net working capital 42,300 20,200 -$22,100 Compute Steamy Spring's current ratio at January 31, 2018. (Round your calculation to two decimal places.) Total current assets Total current liabilities Current ratio 42,300 20,200 2.09 Now calculate Steamy Spring's debt ratio at January 31, 2018. (Round your calculation to two decimal places.) Total liabilities Total assets Debt ratio 36,300 92,700 0.39 Steamy Spring's overall ability to pay current liabilities with current assets has during 2018. Steamy Spring's overall debt position has because the debt ratio has .Overall, Steamy Spring's debt position s because Its debt ratio

Explanation / Answer

1. Steamy Spring;s overall ability to pay current liabilities with current assets has improved. (As the net working capital has gone up from 21,700 to 22,100, its ability to pay off teh current liabilities out of the current assets has improved)

2 & 3. Steamy spring's overall debt position has improved because the debt ratio has increased. (The debt ratio has increased from 0.15 or15% to .39 (39%) whihc means the company is more leveraged. Although purely from the risk perspective, the risk level has also increased)

4 & 5. Steamy spring's debt position is strong because the debt ration is not troublesome and still falls below the normal range

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