The following data are taken from the balance sheet at the end of the current year. Cash Accounts receivable Inventory Prepaid expenses Marketable securities Property, plant, and equipment Accounts payable Accrued liabilities Income tax payable Notes payable, short-term $154,000 210,000 240,000 15,000 350,000 375,000 245,000 4,000 10,000 85,000 Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Round ratios to one decimal place. a. Working Capital b. Current Ratio c. Quick Ratio

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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### Balance Sheet Data for Year-End Financial Analysis

The following data are taken from the balance sheet at the end of the current year:

- **Cash:** $154,000
- **Accounts receivable:** $210,000
- **Inventory:** $240,000
- **Prepaid expenses:** $15,000
- **Marketable securities:** $350,000
- **Property, plant, and equipment:** $375,000
- **Accounts payable:** $245,000
- **Accrued liabilities:** $4,000
- **Income tax payable:** $10,000
- **Notes payable, short-term:** $85,000

#### Determine the following:

1. **Working Capital**
2. **Current Ratio**
3. **Quick Ratio**

Note: Round ratios to one decimal place.

---

#### Formulas for Financial Analysis

**a. Working Capital:**

\[ \text{Working Capital} = \text{Current Assets} - \text{Current Liabilities} \]

\[ \text{Current Assets} = \text{Cash} + \text{Accounts Receivable} + \text{Inventory} + \text{Prepaid Expenses} + \text{Marketable Securities} \]

\[ \text{Current Liabilities} = \text{Accounts Payable} + \text{Accrued Liabilities} + \text{Income Tax Payable} + \text{Notes Payable, Short-Term} \]

**b. Current Ratio:**

\[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \]

**c. Quick Ratio:**

\[ \text{Quick Ratio} = \frac{\text{Quick Assets}}{\text{Current Liabilities}} \]

\[ \text{Quick Assets} = \text{Current Assets} - \text{Inventory} - \text{Prepaid Expenses} \]

**Data Inputs for Calculations:**

Current Assets:
- Cash: $154,000
- Accounts Receivable: $210,000
- Inventory: $240,000
- Prepaid Expenses: $15,000
- Marketable Securities: $350,000

Current Liabilities:
- Accounts Payable: $245,000
- Accrued Liabilities: $4,000
- Income Tax Payable: $10,000
- Notes Payable, Short-Term: $85
Transcribed Image Text:### Balance Sheet Data for Year-End Financial Analysis The following data are taken from the balance sheet at the end of the current year: - **Cash:** $154,000 - **Accounts receivable:** $210,000 - **Inventory:** $240,000 - **Prepaid expenses:** $15,000 - **Marketable securities:** $350,000 - **Property, plant, and equipment:** $375,000 - **Accounts payable:** $245,000 - **Accrued liabilities:** $4,000 - **Income tax payable:** $10,000 - **Notes payable, short-term:** $85,000 #### Determine the following: 1. **Working Capital** 2. **Current Ratio** 3. **Quick Ratio** Note: Round ratios to one decimal place. --- #### Formulas for Financial Analysis **a. Working Capital:** \[ \text{Working Capital} = \text{Current Assets} - \text{Current Liabilities} \] \[ \text{Current Assets} = \text{Cash} + \text{Accounts Receivable} + \text{Inventory} + \text{Prepaid Expenses} + \text{Marketable Securities} \] \[ \text{Current Liabilities} = \text{Accounts Payable} + \text{Accrued Liabilities} + \text{Income Tax Payable} + \text{Notes Payable, Short-Term} \] **b. Current Ratio:** \[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \] **c. Quick Ratio:** \[ \text{Quick Ratio} = \frac{\text{Quick Assets}}{\text{Current Liabilities}} \] \[ \text{Quick Assets} = \text{Current Assets} - \text{Inventory} - \text{Prepaid Expenses} \] **Data Inputs for Calculations:** Current Assets: - Cash: $154,000 - Accounts Receivable: $210,000 - Inventory: $240,000 - Prepaid Expenses: $15,000 - Marketable Securities: $350,000 Current Liabilities: - Accounts Payable: $245,000 - Accrued Liabilities: $4,000 - Income Tax Payable: $10,000 - Notes Payable, Short-Term: $85
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