You have inherited money from your grandparents, and a friend suggests that you consider buying shares in Wildhorse Ski Products, which manufactures skis and bindings. Because you may need to sell the shares within the next two years to finance your university education, you start your analysis of the company data by calculating (1) working capital, (2) the current ratio, and (3) the quick ratio. Wildhorse’s statement of financial position is as follows: Current assets Cash $148,700 Inventory 168,800 Prepaid expenses 20,453 Non-current assets Land 47,600 Building and equipment 137,800 Other 15,700 Total $539,053 Current liabilities $161,700 Long-term debt 200,700 Share capital 87,200 Retained earnings 89,453 Total $539,053 (a1) What amount of working capital is currently maintained? $________ (b1)Your preference is to have a quick ratio of at least 0.80 and a current ratio of at least 2.00. How do the existing ratios compare with your criteria? (Round answers to 2 decimal places, e.g. 18.42.) Current ratio _______ Quick ratio ____________
You have inherited money from your grandparents, and a friend suggests that you consider buying shares in Wildhorse Ski Products, which manufactures skis and bindings. Because you may need to sell the shares within the next two years to finance your university education, you start your analysis of the company data by calculating (1)
Current assets Cash $148,700
Inventory 168,800
Prepaid expenses 20,453
Non-current assets Land 47,600
Building and equipment 137,800
Other 15,700
Total $539,053
Current liabilities $161,700
Long-term debt 200,700
Share capital 87,200
Retained earnings 89,453
Total $539,053
(a1) What amount of working capital is currently maintained? $________
(b1)Your preference is to have a quick ratio of at least 0.80 and a current ratio of at least 2.00. How do the existing ratios compare with your criteria? (Round answers to 2 decimal places, e.g. 18.42.)
Current ratio _______ Quick ratio ____________
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