Calculate and analyze liquidity measures Following are the current asset and | | | | | | | | | |
current liability sections of the balance sheets for Calketch, Inc., at August 31, 2014 | | |
and 2013 (in millions): | |
| August 31, 2014 | August 31, 2013 | | |
Current Assets | | | |
Cash | $18 | $36 | |
Marketable Sec | $42 | $60 | |
AR | $78 | $48 | |
Inventories | $108 | $48 | |
Total Current Assets | $246 | $192 | |
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Current Liabilities | | | |
NP | $18 | $48 | |
AP | $60 | $84 | |
Other Current Liabilities | $54 | $42 | | | | | | | | | |
Total Current liabilities | $132 | $174 | | | | | | | | | |
Required: | | | | | | | | | |
a. Calculate the working capital and current ratio at each balance sheet date. | | | | | | | | | |
Round your current ratio answers to two decimal places. | | | | | | | | | |
Working Capital = Current Assets less Current Liabilities | | | | | | | | | |
| August 31, 2014 | August 31, 2013 | | | | | | | | | | |
CA | | | | | | | | | | | |
CL | | | | | | | | | | | |
WC | | | | | | | | | | | |
Cuurent Ratio = CA/CL | | | | | | | | | |
CA | | | | | | | | | | | | |
CL | | | | | | | | | | | |
ratio | | | | | | | | | | | |
b. Describe the change in the firm’s liquidity from 2013 to 2014. | | | | | | | | | |
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