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Working Capital / Current Ratio

3.10) Evans, Inc had current liabilities at november 30 of $137,400. The firms current ratio at that date was 1.8.

A) calculate the firms current assets and working capital at November 30.

B) assume that managment paid $30,600 of accounts payable on November 29. Calculate the current ratio and working capital at November 30 as if the November 29 payment had not been made. Round your current ratio answer to two decimal places.

C) Explain the changes,if any, to working capital and the current ratio that would be caused by the November 29 payment.

3.14) Calculate and analyze liquidity measures.

following are the current asset and current liability sections of the balance sheets for Calketch, Inc, at August 31, 2009 and 2008 ( in millions)

Current assets: August 31, 2008 August 31,2009
cash $ 12 $24
marketable securities 28 40
accounts receivable 52 32
inventories 72 32
--------- --------
Total current assets $ 164 $ 128

Current liabilities: August 31, 2008 August 31, 2009
Note payable $ 12 $ 32
Accounts payable 40 56
other accured liabilities 36 28
------ -------
Total current liabilities $ 88 $ 116

A) calculate the working capital and current ratio at each balance sheet date. Round your current ratio answer to two decimal places.

B) describe the change in the firm's liquidity from 2008 to 2009.

Solution Summary

The solution explains how to calculate the working capital and the current ratio and evaluate the impact on working capital and current ratio of the given transactions.

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