Question
In: Accounting
The following data were taken from the balance sheet of Nilo Company at the end of...
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 | $297,200 | $224,000 | ||||||
| Marketable securities | 344,100 | 252,000 | ||||||
| Accounts and notes receivable (net) | 140,700 | 84,000 | ||||||
| Inventories | 880,400 | 658,800 | ||||||
| Prepaid expenses | 453,600 | 421,200 | ||||||
| Total current assets | $2,116,000 | $1,640,000 | ||||||
| Current liabilities: | ||||||||
| Accounts and notes payable | ||||||||
| (short-term) | $266,800 | $280,000 | ||||||
| Accrued liabilities | 193,200 | 120,000 | ||||||
| Total current liabilities | $460,000 | $400,000 | ||||||
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.
Solutions
Expert Solution
a.
| Current Year | Previous Year | |
| 1. Working capital | $1,656,000 | $1,240,000 |
| 2. Current ratio | 4.6 | 4.1 |
| 3. Quick ratio | 1.7 | 1.4 |
Working:
| 1 | Working capital = Current assets - Current liabilities |
| Current Year: $2116000 - $460000 = $1656000 | |
| Previous Year: $1640000 - $400000 = $1240000 | |
| 2 | Current ratio = Current assets/Current liabilities |
| Current year: $2116000/$460000 = 4.6 | |
| Previous year: $1640000/$400000 = 4.1 | |
| 3 | Quick ratio = Quick assets/Current liabilities |
| Quick assets = Cash + Marketable securities + Accounts and notes receivable | |
| Current year: | |
| Quick assets = $297200 + $344100 + $140700 = $782000 | |
| Quick ratio = $782000/$460000 = 1.7 | |
| Previous year: | |
| Quick assets = $224000 + $252000 + $84000 = $560000 | |
| Quick ratio = $560000/$400000 = 1.4 |
b. The liquidity of Nilo has increased from the preceding year to the current year. The working capital, current ratio, and quick ratio have all increased. Most of these changes are the result of an increase in current assets relative to current liabilities.
ekkarill92 answered 1 year agoRelated Solutions
The following data were taken from the balance sheet of Nilo Company at the end of...
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Previous Year
Current assets:
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$324,000
Marketable securities
491,000
364,500
Accounts and notes receivable
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200,900
121,500
Inventories
982,100
658,800
Prepaid expenses
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421,200
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$1,890,000
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$359,600
$378,000
Accrued liabilities
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162,000
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The following data were taken from the balance sheet of Nilo Company at the end of...
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Company at the end of two recent fiscal years:
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Accrued liabilities
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The following data were taken from the balance sheet of Nilo Company at the end of...
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Company at the end of two recent fiscal years:
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$403,200
Marketable securities
570,200
453,600
Accounts and notes receivable
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233,300
151,200
Inventories
617,800
422,700
Prepaid expenses
318,200
270,300
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$1,701,000
Current liabilities:
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$417,600
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Accrued liabilities
302,400
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Total current liabilities
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The following data were taken from the balance sheet of Nilo Company at the end of...
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Current Year
Previous Year
Current assets:
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$347,200
Marketable securities
531,100
390,600
Accounts and notes receivable
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217,200
130,200
Inventories
1,546,400
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Prepaid expenses
796,600
725,400
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$411,800
$434,000
Accrued liabilities
298,200
186,000
Total current liabilities
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Marketable securities
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Accounts and notes receivable
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199,800
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Inventories
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Prepaid expenses
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Marketable securities
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Accounts and notes receivable
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253,500
168,000
Inventories
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614,900
Prepaid expenses
457,000
393,100
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Prepaid expenses 311,100 289,400 Total current assets $2,379,000
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Marketable securities
485,800
351,000
Accounts and notes receivable
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198,700
117,000
Inventories
683,100
475,800
Prepaid expenses
351,900
304,200
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$317,200
Marketable securities
492,800
356,900
Accounts and notes receivable
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201,600
118,900
Inventories
646,800
372,100
Prepaid expenses
333,200
237,900
Total current assets
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$1,403,000
Current liabilities:
Accounts and notes payable
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$406,000
$427,000
Accrued liabilities
294,000
183,000
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$610,000
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Marketable securities
387,200
280,800
Accounts and notes receivable
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158,400
93,600
Inventories
798,600
585,600
Prepaid expenses
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374,400
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