Problem

Roy’s Toys is a manufacturer of toys and children’s products. The following are selected i...

Roy’s Toys is a manufacturer of toys and children’s products. The following are selected items appearing in a recent balance sheet (dollar amounts are in millions):

Cash and short-term investments

$47.3

Receivables

159.7

Inventories

72.3

Prepaid expenses and other current assets

32.0

Total current liabilities

0 1

Total liabilities

279.4

Total stockholders’ equity

344.0

a. Using the information above, compute the amounts of Roy’s Toys. (1)quick assets and (2) total current assets.


b. Compute for Roy’s Toys the (1) quick ratio, (2) current ratio, and (3) dollar amount of working capital. (Round ratios to one decimal place)


c. Discuss whether Roy’s Toys appears liquid from the viewpoint of a short-term creditor.

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