Question

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 $556,300 $445,200 Marketable securities 644,200 500,900 Accounts and notes receivable (net) 263,500 166,900 Inventories 603,900 452,600 Prepaid expenses 311,100 289,400 Total current assets $2,379,000 $1,855,000 Current liabilities: Accounts and notes payable (short-term) $353,800 $371,000 Accrued liabilities 256,200 159,000 Total current liabilities $610,000 $530,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year 1. Working capital $ $ 2. Current ratio 3. Quick ratio b. The liquidity of Nilo has improved from the preceding year to the current year. The working capital, current ratio, and quick ratio have all increased . Most of these changes are

Answer 1

Req 1.
Working capital
		Current Yr	Previous Yr
Total Current assets	2379000	1855000
Less: Current liabilities	610000	530000
Working capital	1769000	1325000
Current ratio:
		Current Yr	Previous Yr
Total Current assets	2379000	1855000
Divide: Current liabilities	610000	530000
Current ratio	3.9	3.5
Quick Ratio:
		Current Yr	Previous Yr
Cash		556300	445200
Marketable securities	644200	500900
Accounts receivable	263500	166900
Total Liquid assets	1464000	1113000
Divide: Current liabilities	610000	530000
Quick ratio		2.4	2.1
Req 2.
Liquidity has been improved
The working capital, Current ratio and Quick ratio have all increased
Most of these changes are positive