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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Case 1-69 Financial Statement Analysis

Agency Rent-A-Car Inc. rents cars to customers whose vehicles are unavailable due to accident.

theft, or repair (“Wheels while your car heals"). The company has a fleet of more than 40,000 cars located at 3'00 offices throughout the United States and Canada; Its balance sheets at January 31, 2019, and January 31, 2018. contain the following information (all dollar amounts are stated in thousands of dollars):

Chapter 1, Problem 69.1C, Case 1-69 Financial Statement Analysis Agency Rent-A-Car Inc. rents cars to customers whose vehicles

Required:

1. What is the dollar amount of current assets and current liabilities at January 31, 2019? At January 31, 2018? What does this information tell you about the company’s liquidity?

To determine

Concept Introduction:

Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

  Assets = Liabilities + Equity

To Calculate:

The amount of current assets and current liabilities as on Jan. 31, 2019 and Jan, 31, 2018 and comment on the liquidity of the company.

Explanation

The amount of current assets and current liabilities as on Jan. 31, 2019 and Jan, 31, 2018 are calculated as follows:

    Agency Rent-A-Car Inc.
    1/31/20191/31/2018
    Current Assets:
    Cash $ 5,210 $ 4,125
    Accounts Receivable $ 28,100 $ 32,891
    Supplies $ 7,152 $ 7,853

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