Current Position Analysis The following data were taken from the balance sheet o

Question

Current Position Analysis

The following data were taken from the balance sheet of Bock Suppliers Company:

a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.

Current Year Previous Year Cash $349,600 $272,000 Temporary investments 404,800 306,000 Accounts and notes receivable (net) 165,600 102,000 Inventories 637,600 414,800 Prepaid expenses 328,400 265,200 Total current assets $1,886,000 $1,360,000 Accounts and notes payable (short-term) $266,800 $280,000 Accrued liabilities 193,200 120,000 Total current liabilities $460,000 $400,000 EXAM 4 1. EX.13- AL 2 Ex.13-11Ao 3 Ex.13 2.gu Current Podltion Analysls The tellowina data waro taloan trom the balancs shet ct Bock Suppler Campany: $340,600 272,000 Ex.13 8.Ago U4,800 Accounts and notcs recdvabla tnt) Inventerie Prepaid oenss 637,600 6. EX15-G.ALGO 328,100 Total ouent assets 1,3C0,000 Accounts and notcs payable 8 Fx 15-3 Algn $266,800 193,200 450,000 a. Determine for each Year(1) the working capital, (2) the current ratio, and 3) the quick ratio. Round r tics to one decimal place. FX 15-91A Accrued liabiities 20,000 Total cument abilitie: 10. EX14-15 ALGO 11. Pi.142Algu Previous Year 1. Workina capit:l 2. Current ratia 3. Qick ratio b. The liquidty of Bock Suppliers has from tre preceding Year to the current year. The wordng CDpital, current ratio, and quick ratio havc 1 . Moot of these changes are the resut of an in Progress: 7/11 items me Remaining: 1:42:42 Submit lest for Grading Olype here to search

Explanation / Answer

(a)

WORKING NOTES:

1. WORKING CAPITAL = TOTAL CURRENT ASSETS - TOTAL CURRENT LIABILITIES

2. CURRENT RATIO = TOTAL CURRENT ASSETS / TOTAL CURRENT LIABILITIES

3. QUICK RATIO = TOTAL CURRENT ASSETS - INVENTORY -PREPAID EXPENSES / TOTAL CURRENT LIABILITIES

(b) The liquidity of Bock Suppliers has increased from the preceding year to the current year. The working capital, current ratio, and quick ratio have all increased. Most of these changes are the result of an increase in current assests realtive to current liabilities.

CURRENT YEAR PREVIOUS YEAR WORKING CAPITAL 1,886,000-460,000 = 1,426,000 1,360,000-400,000 = 960,000 CURRENT RATIO 1,886,000 / 460,000 = 4.1 1,360,000 / 400,000 = 3.4 QUICK RATIO 920,000 / 460,000 = 2 680,000 / 400,000 = 1.7

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