Reference no: EM132854896
Question - Information of Greg Manufacturing Company's balance sheet is as follows:
Current Assets Cash and cash equivalents 2,100,000
Marketable securities 7,200,000
Notes receivables 50,500,000
Finished goods 65,000,000
Unexpired insurance 950,000
Asset available for sale 50,000
Current liabilities Notes payable 1,400,000
Accounts payable 18,000,000
Accrued expenses 11,000,000
Income tax payable 600,000
Payment due within a year on loan 3,000,000
Required -
I. Calculate the Acid-test ratio for Greg Company and compare it with average industry ratio of 1.52.
II. What is the effect of the collection of notes receivables on the current ratio and net working capital?