Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Galaxy Corporation. Galaxy Corporation Balance Sheet Cash $656,250 Accounts payable $1,575,000 Accounts receivable $2,296,875 Accruals $984,375 Inventory $3,609,375 Notes payable $1,378,125 Total current assets $6,562,500 Total current liabilities $3,937,500 Long-term debt $6,562,500 Total debt $10,500,000 Common equity $2,100,000 Net plant and equipment $10,937,500 Retained earnings $4,900,000 Total equity $7,000,000 Total assets $17,500,000 Total liabilities and equity $17,500,000 During your interview for an introductory-level analyst position at Galaxy Corporation, the interviewer asks you to complete the following table using the information provided in the preceding balance sheet. Net Working Capital $__________________________ Current Ratio ___________.__________ Assume that Galaxy Corporation decides to acquire an additional $875,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause Galaxy’s current ratio to___________(increase, decrease, or stays the same pick one)
Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Galaxy Corporation. Galaxy Corporation Balance Sheet Cash $656,250 Accounts payable $1,575,000 Accounts receivable $2,296,875 Accruals $984,375 Inventory $3,609,375 Notes payable $1,378,125 Total current assets $6,562,500 Total current liabilities $3,937,500 Long-term debt $6,562,500 Total debt $10,500,000 Common equity $2,100,000 Net plant and equipment $10,937,500 Retained earnings $4,900,000 Total equity $7,000,000 Total assets $17,500,000 Total liabilities and equity $17,500,000 During your interview for an introductory-level analyst position at Galaxy Corporation, the interviewer asks you to complete the following table using the information provided in the preceding balance sheet. Net Working Capital $__________________________ Current Ratio ___________.__________ Assume that Galaxy Corporation decides to acquire an additional $875,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause Galaxy’s current ratio to___________(increase, decrease, or stays the same pick one)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Galaxy Corporation.
Galaxy Corporation Balance Sheet
|
|
|
|
|
|
|---|---|---|---|---|
| Cash | $656,250 | Accounts payable | $1,575,000 | |
| $2,296,875 | Accruals | $984,375 | ||
| Inventory | $3,609,375 | Notes payable | $1,378,125 | |
| Total current assets | $6,562,500 | Total current liabilities | $3,937,500 | |
| Long-term debt | $6,562,500 | |||
| Total debt | $10,500,000 | |||
| Common equity | $2,100,000 | |||
| Net plant and equipment | $10,937,500 | $4,900,000 | ||
| Total equity | $7,000,000 | |||
| Total assets | $17,500,000 | Total liabilities and equity | $17,500,000 |
During your interview for an introductory-level analyst position at Galaxy Corporation, the interviewer asks you to complete the following table using the information provided in the preceding balance sheet.
| Net |
$__________________________ |
| ___________.__________ |
Assume that Galaxy Corporation decides to acquire an additional $875,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause Galaxy’s current ratio to___________(increase, decrease, or stays the same pick one) .
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