Question

Maple Leaf Foods Inc. is a packaged meat producer. It reports biological assets on its balance sheet that consist of hogs and poultry livestock. These are considered current assets somewhat similar to inventory. The company reports the following current assets and current liabilities at December 31, 2017 (in thousands):

Cash		$203,425
Accounts payable and accruals		300,659
Accounts receivable		123,968
Biological assets		111,735
Current portion of long-term debt		805
Income taxes payable		7,855
Inventories		273,365
Notes receivable		28,918
Other current liabilities		31,597
Prepaid expenses and other assets		24,393
Provisions		9,335

a)Prepare the current liabilities section of the balance sheet. The provisions are due within 12 months of the balance sheet date. (Enter amounts in thousands.)

b) Calculate the current and acid-test ratios..

Answer 1

a)

Maple Leaf Foods Inc
BALANCE SHEET (PARTIAL)
AT DECEMBER 31, 2017
	$
Current liabilities:
Accounts payable and accruals	300,659.00
Income taxes payable	7,855.00
Other current liabilities	31,597.00
Provisions	9,335.00
Total Current liabilities	349,446.00

(b)

Current Ratio $ (in thousands)
Current Assets	/	Current Liabilities	=	Current Ratio
654.069	/	349.45	=	1.87	:1
Acid Test Ratio $ (in thousands)
(Current Assets -Inventories)	/	Current Liabilities	=	Acid Test Ratio
(654.09 - 273.365)	/	349.45	=	1.09	:1

Explanation

Current assets	$ (in thousands)
Cash	203.425
Accounts receivable	123.968
Inventories	273.365
Notes receivable	28.918
Prepaid expenses and other assets	24.393
Total	654.069