Chapter 3, Problem 3.20P

Problem 3.20

LO 6

Calculate and analyze liquidity measures Following are the current asset and current liability sections of the balance sheets for Calketch, Inc., at August 31, 2017 and 2016 (in millions):

Current Assets	August 31, 2017	August 31, 2016
Cash	$ 9	$ 18
Marketable securities	21	30
Accounts receivable	46	24
Inventories	67	45
Total current assets

Current Liabilities$143$117 Note payable $ 9 $ 24 Accounts payable 30 45 Other accrued liabilities 26 21 Total current liabilities $65 $ 90

Required:

1. Calculate the working capital and current ratio at each balance sheet date. Round your current ratio answers to one decimal place.
2. Describe the change in the firm’s liquidity from 2016 to 2017.