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Tulsa t/takeAssignmentMain.do?invokers assignments&itakeAssignmentSessionLocator-; assignment-take&ingO; Show Me How Calculator eBook Current Position Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash Marketable securities Accounts and notes receivable (net) Inventories Prepaid expenses $362,500 419,800 171,700 1,119,400 76,600 $2,650,000 $294,400 331,200 110,400 841,800 538,200 $2,116,000 Total current assets Current liabilities: Accounts and notes payable $307,400 222,600 $530,000 $322,000 138,000 $460,000 (short-term) Accrued liabilities Total current liabilities a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round rati Current YearPrevious Year 1. Working capital 2. Current ratio 3. Quick ratio The liquidity of Nilo has improved to current liabilities. from' the preceding year to the current year. The working capit

Explanation / Answer

a) Formula Current Year Previous Year 1 Working Capital = Current Assets - Current Liabilities Total Current Assets 2650000 2116000 (As given in the Question) Total Current Liabilities 530000 460000 (As given in the Question) Working Capital (in $) = 2650000-530000 = 2116000-460000 2120000 1656000 Formula Current Year Previous Year 2 Current Ratio   = Current Assets / Current Liabilities Total Current Assets 2650000 2116000 (As given in the Question) Total Current Liabilities 530000 460000 (As given in the Question) Current Ratio (in times ) = 2650000/530000 = 2116000/460000 5.00 4.60 Formula Current Year Previous Year 3 Quick Ratio = (Current Assets - Inventory) / Current Liabilities = (Current Assets - Inventory) Current Year = 2650000-1119400 1530600 1274200 Previous Year = 2116000-841800 Total Current Liabilities 530000 460000 Quick Ratio (in times) = 1530600/530000 = 1274200/460000 2.89 2.77 b) Yes, The Liquidity of Nio has been improved in Current Year as compared to Previous year, since the Current Ratio and Quick Ratio has been increased in the Current Year. The Working Capital as also been increased.

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