Chapter 11, Problem 11.3BYP

(a)

To determine

Financial Statements: A part of annual report that is attributed to the financials of the company for an accounting period is called financial statements. These include income statement, statement of retained earnings, balance sheet and cash flow statement.

Current Liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Working Capital: It measures the amount of current assets of a company over and above its current liabilities. A positive working capital is preferred in any business.

Current Ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

To identify: The largest current liability account and total current liabilities for Company A and W.

(b)(1)

To determine

To compute: The working capital for Company A for 2013 and W for 2014.

(2)

To determine

To compute: The current ratio for Company A for 2013 and W for 2014.

(c)

To determine

To analyze: The liquidity of Company A and W based on working capital and current ratio.