Wowk Corporation has provided the following financial data:Assets Current assets: Cash$133,000 Accounts receivable, net 157,000 Inventory 215,000 Prepaid expenses 24,000 Total current assets 529,000 Plant and equipment, net 768,000 Total assets$1,297,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$95,000 Accrued liabilities 18,000 Notes payable, short term 90,000 Total current liabilities 203,000 Bonds payable 110,000 Total liabilities 313,000 Stockholders' equity: Common stock, $4 par value 200,000 Additional paid-in capital 80,000 Retained earnings 704,000 Total stockholders' equity 984,000 Total liabilities & stockholders' equity$1,297,000 Required:a. What is the company's working capital?b.
What is the company's current ratio?c. What is the company's acid-test (quick) ratio?
What will be an ideal response?
a.
Working capital = Current assets - Current liabilities
= $529,000 - $203,000 = $326,000
b.
Current ratio = Current assets ÷ Current liabilities
= $529,000 ÷ $203,000 = 2.61 (rounded)
c.
Acid-test (quick) ratio = Quick assets* ÷ Current liabilities
= $290,000 ÷ $203,000 = 1.43 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $133,000 + $0 + $157,000 = $290,000
You might also like to view...
Goods held on consignment are the property of the ____________________
Fill in the blank(s) with correct word
Consider the following statements. Which one of them is phrased in a negative way?
A) Please clarify your request. B) Your copier will be repaired next week. C) Your payment is late. D) Thank you for sharing your concerns about your shopping experience. E) Please verify the enclosed statement and provide a correct copy.
Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance
Indicate whether the statement is true or false
Upward communication fosters an environment where employees can offer suggestions and feel they are important to the organization
Indicate whether the statement is true or false