Print ltem Current assets and current liabilities for Brayden Company are as fol

Question

Print ltem Current assets and current liabilities for Brayden Company are as follows: 20Y9 $498,600 269,300 20Y8 $532,400 301,500 Current assets Cdrrent liabilities What conclusions can be drawn regarding Brayden's ability to meet its financial obligations? Oa. The current ratio has improved, while the working capital has decreased. @b. The current ratio has worsened, and the working capital has decreased. Oc. The current ratio has improved, and the working capital has increased. Od. The current ratio has worsened, but the working capital has increased.

Explanation / Answer

Answer : a

The Current ratio has improved while working capital has decreased.

Current ratio = Current Asset / Current Liabilities.

For 2018

> Current ratio = 532400 / 301500 = 1.77.

For 2019

> Current ratio = 498600 / 269300 = 1.85.

Working Capital = Current Assets - Current Liabilities

For 2018

> Working Capital = 532400 - 301500 = 230900.

For 2019

> Working Capital = 498600 - 269300 = 229300.

From above we can say that current ratio has improved and working capital has decreases.

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