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Following are the current asset and current liability sections of the balance sheets for Freedom Incorporated at January 31, 2023 and 2022 (in millions): Current Assets Cash Accounts receivable Inventories Total current assets Current Liabilities Note payable Accounts payable Other accrued liabilities. Total current liabilities January 31, January 31, 2023 2022 $30 20 40 $90 $20 30 10 $60 $10 25 45 $80 $20 10 10 $40 Required: a. Calculate the working capital and current ratio at each balance sheet date. b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year?

Following are the current asset and current liability sections of the balance sheets for Freedom Incorporated at January 31, 2023 and 2022 (in millions): Current Assets Cash Accounts receivable Inventories Total current assets Current Liabilities Note payable Accounts payable Other accrued liabilities. Total current liabilities January 31, January 31, 2023 2022 $30 20 40 $90 $20 30 10 $60 $10 25 45 $80 $20 10 10 $40 Required: a. Calculate the working capital and current ratio at each balance sheet date. b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year?

FINANCIAL ACCOUNTING
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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Problem 3-21 (Static) Calculate and analyze liquidity measures LO 3-6 Following are the current asset and current liability sections of the balance sheets for Freedom Incorporated at January 31, 2023 and 2022 (in millions): Current Assets Cash Accounts receivable Inventories Total current assets Current Liabilities Note payable Accounts payable Other accrued liabilities Total current liabilities January 31, January 31, 2023 2022 $30 20 40 $90 $20 30 10 $ 60 $ 10 25 45 $ 80 $ 20 10 10 $ 40 Required: a. Calculate the working capital and current ratio at each balance sheet date. b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year?
Transcribed Image Text:Problem 3-21 (Static) Calculate and analyze liquidity measures LO 3-6 Following are the current asset and current liability sections of the balance sheets for Freedom Incorporated at January 31, 2023 and 2022 (in millions): Current Assets Cash Accounts receivable Inventories Total current assets Current Liabilities Note payable Accounts payable Other accrued liabilities Total current liabilities January 31, January 31, 2023 2022 $30 20 40 $90 $20 30 10 $ 60 $ 10 25 45 $ 80 $ 20 10 10 $ 40 Required: a. Calculate the working capital and current ratio at each balance sheet date. b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year?
Req A Req B and C Calculate the working capital and current ratio at each balance sheet date. Note: Enter "Working capital" in millions of dollars (i.e., 10,000,000 should be entered as 10). Round your "Current ratio" to 1 decimal place. (e.g., 32.1) Working capital Current ratio 01/31/2023 01/31/2022 Show Transcribed Text Req A Req B and C 3 c b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year? b. Based on the working capital and current ratio measures, the firm has become c. Changes in a firm's cash position and its profitability are not directly related under
Transcribed Image Text:Req A Req B and C Calculate the working capital and current ratio at each balance sheet date. Note: Enter "Working capital" in millions of dollars (i.e., 10,000,000 should be entered as 10). Round your "Current ratio" to 1 decimal place. (e.g., 32.1) Working capital Current ratio 01/31/2023 01/31/2022 Show Transcribed Text Req A Req B and C 3 c b. Evaluate the firm's liquidity at each balance sheet date. c. Assume that the firm operated at a loss during the year ended January 31, 2023. How could cash have increased during the year? b. Based on the working capital and current ratio measures, the firm has become c. Changes in a firm's cash position and its profitability are not directly related under
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