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Quick ratio, working capital, current ratio, transactions

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1. compute a) the working capital b) the current ratio and c) the quick ratio.

Round to one decimal place.

2. List the following captions on a sheet of paper:

Transactions________Working Capital_________Current Ration______Quick Ratio

Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given above. Round to one decimal point.

a. sold marketable securities at no gain or loss $37,500
b. Paid accounts payable $84,000
c. Purchased goods on account $55,000
d. Paid notes payable $32,500
e. Declared a cash dividend $38,000
f. Declared a common stock dividend on common stock $21,500
g. Borrowed cash from bank on a long term note $185,000
h. Received cash on account $93,5000
i. Issued additional shares of stock for cash $175,000
j. paid cash for prepaid exspenses $15,000

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Solution Summary

Quick ratio, working capital, current ratios and transactions are examined.

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Affect Walton's Current Ratio, Quick Ratio & Working Capital

As of December 31, 2010, Walton Corporation had a current ratio of 1.84, quick ratio of 1.45, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. Indicate how the given transaction, if it occurred in January 2011, would affect Walton's current ratio, quick ratio, and working capital.

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