Current Position Analysis The following data were taken from the balance sheet o
ID: 2582893 • Letter: C
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.
b. The liquidity of Bock Suppliers has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in current assets relative to current liabilities.
Current Year Previous Year Cash $376,200 $273,600 Temporary investments 435,600 307,800 Accounts and notes receivable (net) 178,200 102,600 Inventories 914,800 625,900 Prepaid expenses 471,200 400,100 Total current assets $2,376,000 $1,710,000 Accounts and notes payable (short-term) $382,800 $399,000 Accrued liabilities 277,200 171,000 Total current liabilities $660,000 $570,000Explanation / Answer
Current year $ Previous year $ Total current assets 23,76,000 17,10,000 Less ; Inventories (9,14,800) (6,25,900) Prepaid Expenses (4,71,200) (4,00,100) Quick assets 9,90,000 6,84,000 Total Current liabilities 6,60,000 5,70,000 1 Working capital = Current assets - Current liabilities Current year $ Previous year $ Total current assets 23,76,000 17,10,000 Less: Total current liabilities (6,60,000) (5,70,000) Working capital 17,16,000 11,40,000 2 Current ratio = Current assets / Current liabilities Current year $ Previous year $ Total current assets 23,76,000 17,10,000 Total current liabilities 6,60,000 5,70,000 Current ratio (Times) 3.60 3.00 3 Quick ratio = Quick assets / Current liabilities Current year $ Previous year $ Total Quick assets 9,90,000 6,84,000 Total current liabilities 6,60,000 5,70,000 Quick ratio (Times) 1.50 1.20
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