the following data were taken from the ballance sheet of beatty company: dec 31,
ID: 2347386 • Letter: T
Question
the following data were taken from the ballance sheet of beatty company:dec 31, 2012 dec 31, 2011
cash 330,000 238,000
temporary investments 465,000 385,000
accounts and notes receivable (net) 425,000 295,000
inventories 420,000 291,000
prepaid expenses 312,000 141,000
Total Current Assets 1,952,000 1,350,000
accounts and notes payable (short term) 420,000 400,000
accrued liabilities 190,000 140,000
Total Current liabilities 610,000 540,000
a) determine for each year the working capital, the current ratio, and the quick ratio. Round ratios to one decimal place.
b) What conclusions can be drawn from these data as to the company's ability to meet its currently maturing debts?
Explanation / Answer
Working Capital= Current Asset- Current Liabilities for 2012, WC= 1952000-610000= $1342000 For 2011, WC= 1350000-540000=$810000 Current ratio= Current Asset/Current Liabilities for 2012, CR=1952000/610000=3.2 for 2011, CR=1350000/540000=2.5 quick ratio= (current asset-inventories)/Current Liabilities for 2012, QR= (1952000-420,000)/610000= 2.51 for 2011, QR= (1350000-291,000)/540000= 1.96
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