Question

Motivated by recent decreases in its liquidity ratios, Nightscape Components is analyzing several of its divisions for opportunities to better manage working capital. Company management is using Tableau to help visualize the current ratio and the the acid-test ratio for each of the company's 9 divisions. As part of the investigating team, you are examining this Tableau Dashboard that portrays those factors in each of the four most recent years for the Crafting Materials Division. The industry norm for the current ratio is 1.4, and the industry norm for the acid-test ratio is 0.7. Current Assets and Current Liabilities Total current assets Total current liabilities 2018 2019 2020 2020 2021 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Total current Total current Total current Total current Total current Total current Total current Total current assets liabilities assets liabilities assets liabilities assets liabilities

Answer 1

Required 1:	1.63 in 2018 and 1.44 in 2021
Required 2:	The division's current ratio is decreasing slower than that of Nightscape as a whole
Required 3:	Current liabilities are growing faster than current assets, which has contributed to the change in the current ratio.
Required 4:	The division's acid test ratio is actually increasing and, in fact, is greater than the industry norm.
Required 5:	The recent decline in the division's current ratio is at least partially offset by the increase in the more stringent acid test, and both ratios remain above their industry norms.