Current Position Analysis The following data were taken from the balance sheet of Nilo Company at...

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Current Position Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fisca

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Answer 1

Answer #1

a)

Working capital = Current assets - Current liabilities

Current year:

Working capital = $1,760,000 - $550,000

Working capital = $1,210,000

Previous year:

Working capital = $1,248,000 - $480,000

Working capital = $768,000

Current ratio = Current assets/Current liabilities

Current year:

Current ratio = $1,760,000/$550,000

Current ratio = 3.2

Previous year:

Current ratio = $1,248,000/$480,000

Current ratio = 2.6

Quick ratio:

=(Current assets-Prepaid expenses-Inventory)/Current liabilities

Current year:

Quick ratio = ($1,760,000-$317,900-$617,100)/$550,000

Quick ratio = ($825,000)/$550,000

Quick ratio = 1.5

Previous year:

Quick ratio = ($1,248,000-$262,100-$409,900)/$480,000

Quick ratio = ($576,000)/$480,000

Quick ratio = 1.2

	Current year	Previous year
Working capital	$1,210,000	$768,000
Current ratio	3.2	2.6
Quick ratio	1.5	1.2

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Answer 2

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