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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 $ 414,000 $ 320,000 Marketable securities 496,800 336,000 Accounts and notes receivable (net) 619,200 464,000 Inventories 351,900 272.000 Prepaid expenses 188,100 208,000 Total current assets $2,070,000 $1,600,000 Current liabilities: Accounts and notes payable (short-term) $ 675,000 $ 600,000 Accrued liabilities 225,000 200,000 Total current liabilities $ 900,000 $ 800,000 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. What conclusions can be drawn from these data as to the company’s ability to meet its currently maturing debts?

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 17, Problem 17.6EX
Textbook Problem

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 $ 414,000 $ 320,000
Marketable securities 496,800 336,000
Accounts and notes receivable (net) 619,200 464,000
Inventories 351,900 272.000
Prepaid expenses 188,100 208,000
Total current assets $2,070,000 $1,600,000
Current liabilities:    
Accounts and notes payable (short-term) $ 675,000 $ 600,000
Accrued liabilities 225,000 200,000
Total current liabilities $ 900,000 $ 800,000

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. What conclusions can be drawn from these data as to the company’s ability to meet its currently maturing debts?

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Chapter 17 Solutions

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