Brief Exercise 2-4 Suppose the following selected condensed data are taken from

Question

Brief Exercise 2-4 Suppose the following selected condensed data are taken from a recent balance sheet of Bob Evans Farms (in millions of dollars) Cash Accounts receivable Inventory Other current assets Total current assets Total current liabilities $31.8 19.2 26.4 24.0 $101.4 $202.8 Compute working capital and the current ratio. (For working capital, enter answer in millions. If answer is negative enter it with a negative sign preceding the number e.g. -15.2 or in parentheses e.g. (15.2). Round Current Ratio to 2 decimal places, e.g.0.78:1.) Working capital $ Current ratio

Explanation / Answer

Working capital=current assets-current liabilities

=(101.4-202.8)

=(101.4 million)(negative)

Current ratio=current assets/current liabilities

=(101.4/202.8)

=0.5:1

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