Determine the (a) working capital, (b) current ratio, and (c) acid-test ratio.
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The following data are taken from the balance sheet at the end of the current year. Determine the (a) working capital, (b) current ratio, and (c) acid-test ratio. Present figures used in your computations. Round ratios to the nearest tenth.
Accounts payable $145,000
Accounts receivable 110,000
Accrued liabilities 4,000
Cash 80,000
Income tax payable 10,000
Inventory 140,000
Marketable securities 250,000
Notes payable, short-term 85,000
Prepaid expenses 15,000
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The expert determines the working capital, current ratio and acid-test ratios.
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Hello!
First of all, we should separate the given items into assets and liabilities. All the items in the list are "current" (either current assets or current liabilities), as they can be converted to cash in the short term.
Current Assets
Cash 80,000
Accounts receivable ...
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