1. Dratif Corporation's working capital is $41,000 and its current liabilities are $112,000. The corporation's current ratio is closest to?
2. Stimac Corporation has total cash of $285,000, no marketable securities, total current receivables of $356,000, total inventory of $181,000, total prepaid expenses of $68,000, total current assets of $890,000, total current liabilities of $306,000, total stockholders’ equity of $2,514,000, total assets of $3,665,000, and total liabilities of $1,151,000. The company’s acid-test (quick) ratio is closest to?
3. Financial statements for Maraby Corporation appear below:
Maraby Corporation | ||||||
Balance Sheet | ||||||
December 31, Year 2 and Year 1 | ||||||
(dollars in thousands) | ||||||
Year 2 | Year 1 | |||||
Current assets: | ||||||
Cash and marketable securities | $ | 220 | $ | 190 | ||
Accounts receivable, net | 190 | 160 | ||||
Inventory | 140 | 150 | ||||
Prepaid expenses | 70 | 80 | ||||
Total current assets | 620 | 580 | ||||
Noncurrent assets: | ||||||
Plant & equipment, net | 1,180 | 1,150 | ||||
Total assets | $ | 1,800 | $ | 1,730 | ||
Current liabilities: | ||||||
Accounts payable | $ | 100 | $ | 120 | ||
Accrued liabilities | 100 | 70 | ||||
Notes payable, short term | 160 | 160 | ||||
Total current liabilities | 360 | 350 | ||||
Noncurrent liabilities: | ||||||
Bonds payable | 450 | 500 | ||||
Total liabilities | 810 | 850 | ||||
Stockholders’ equity: | ||||||
Common stock, $5 par | 160 | 160 | ||||
Additional paid-in capital | 200 | 200 | ||||
Retained earnings | 630 | 520 | ||||
Total stockholders’ equity | 990 | 880 | ||||
Total liabilities & stockholders’ equity | $ | 1,800 | $ | 1,730 | ||
Maraby Corporation | |||
Income Statement | |||
For the Year Ended December 31, Year 2 | |||
(dollars in thousands) | |||
Sales (all on account) | $ | 1,960 | |
Cost of goods sold | 1,370 | ||
Gross margin | 590 | ||
Selling and administrative expense | 230 | ||
Net operating income | 360 | ||
Interest expense | 50 | ||
Net income before taxes | 310 | ||
Income taxes (30%) | 93 | ||
Net income | $ | 217 | |
Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to?
1.) Current assets = working capital+Current liabilities = 41000+112000 = 153000
Current ratio = Current assets/Current liabilities = 153000/112000 = 1.37:1
2) Quick ratio = Quick assets/Current liabilities = (285000+356000)/306000 = 2.09:1
3) Working capital = Current assets-Current liabilities
= 620/360
Working capital = 1.72:1
1. Dratif Corporation's working capital is $41,000 and its current liabilities are $112,000. The corporation's current...
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