The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.b. What conclusions can be drawn from these data as to the company's ability to meet its currently maturing debts? Current YearPrevious YearCurrent assets:Cash$ 391,000$ 300,000Marketable securities515,000354,000Accounts and notes receivable (net)634,000426,000Inventories368,000222,000Prepaid expenses182,000138,000$ 2,090,000$1,440,000Total current assetsCurrent liabilities:Accounts and notes payable (short-term)$ 725,000$ 600,000Accrued liabilities275,000300,000Total current liabilities$1,000,000$ 900,000

The ratio analysis helps to analyze the financial statements of the business.

Answered: Current Year Previous Year Current…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:

a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
b. What conclusions can be drawn from these data as to the company's ability to meet its currently maturing debts?

Current Year
Previous Year
Current assets:
Cash
$ 391,000
$ 300,000
Marketable securities
515,000
354,000
Accounts and notes receivable (net)
634,000
426,000
Inventories
368,000
222,000
Prepaid expenses
182,000
138,000
$ 2,090,000
$1,440,000
Total current assets
Current liabilities:
Accounts and notes payable (short-term)
$ 725,000
$ 600,000
Accrued liabilities
275,000
300,000
Total current liabilities
$1,000,000
$ 900,000

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