Question

1. 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				$535,000			$448,000
   Marketable securities				619,500			504,000
   Accounts and notes receivable (net)				253,500			168,000
   Inventories				887,000			614,900
   Prepaid expenses				457,000			393,100
   	Total current assets			$2,752,000			$2,128,000
   Current liabilities:
   Accounts and notes payable
   	(short-term)			$371,200			$392,000
   Accrued liabilities				268,800			168,000
   	Total current liabilities			$640,000			$560,000

   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   from the preceding year to the current year. The working capital, current ratio, and quick ratio have all  . Most of these changes are the result of an   in current assets relative to current liabilities

Answer 1

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	$2752000-640000 = 2112000			$2128000-560000 = 1568000
2. Current ratio	2752000/640000 = 4.3			2128000/560000 = 3.8
3. Quick ratio	1408000/640000 = 2.2			1120000/560000 = 2

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 liquidity ratio . Most of these changes are the result of an increase in current assets relative to current liabilities