Apña: Grades Aplia Access-FINA3000-A-x a Aplia: Student Question m/af/servlet/qu

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Apña: Grades Aplia Access-FINA3000-A-x a Aplia: Student Question m/af/servlet/quiz?quiz action-takeQuiz&quiz; probGuid-QNAPCOA8010100000041ebc620040000&ctx; ream-0o5 Attempts: Keep the Highest:/5 1. Calculating working capital Aa Aa Gillian Institute Corp.'s CFO has decided to take a closer look at the firm's short-term assets and liabilities. Gillian Institute Corp.'s balance sheet follows Balance Sheet Cash Accounts receivable Inventory Total current assets $200,000 Accounts payable 110,000Accruals $170,000 Notes payable $480,000 $170,000 $55,000 $135,000 $360,000 $350,000 $190,000 $900,000 Total current liabilities Long-term debt Net plant and equipment Total assets $420,000Total common equity $900,000 Total liabilities and equity The value of Gillian Institute Corp.'s working capital iswhile its net working capital is 480,000 $900,000 The value of Gilian Institute Corp.'s net operating wor $120,000 Glian Institute Corp.'s current ratio is If Giian Institute Corp. decides to purchase inventory on account, its current ratio will

Explanation / Answer

1. Working Capital is total current asset = $480,000

Net working capital is Current asset - current liabilty= $480000-$360000= $120000

2. Net operating working capital= Current Asset - Current Liabiliy excluding notess payable= $480000-$225000= $255000

3.Current ratio= Current asset/current liabilities= 480000/360000=1.33

4. If inventory is purchase on account there will be decrease in Current ratio as Liabilty increases

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