Selected condensed data taken from a recent balance sheet of Heidebrecht Inc. ar

Question

Selected condensed data taken from a recent balance sheet of Heidebrecht Inc. are as follows.

HEIDEBRECHT INC.
Balance Sheet (partial)

What are the (a) working capital, (b) current ratio, and (c) acid-test ratio? (Round ratios to 2 decimal places, e.g. 1.58 : 1.)

:1

:1

HEIDEBRECHT INC.
Balance Sheet (partial)

Cash $8,060,000 Short-term investments 4,900,000 Accounts receivable 12,370,000 Inventory 14,930,000 Other current assets 5,440,000 Total current assets $45,700,000 Total current liabilities $39,890,000

Explanation / Answer

Working capital = total assets - total liabiliites

                        = $45,700,000 - $39,890,000

                       = $5,810,000

(b) Current ratio = total current assets/ total current liabilities

                            = 45,700,000/ 39,890,000

                          = 1.15

(c) acid test ratio = cash + short term investment + A/ recievable / total current liabilities

Working capital $5810,000 Current ratio 1.15 Acid- test ratio .63

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