Calculate the current ratio and working capital

Reference no: EM131822981

Question: The chief financial officer (CFO) of Myeneke Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2017, so that the CFO could get an idea of how the company stood. He knows that certain debt agreements with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows.

Instructions: (a) Calculate the current ratio and working capital based on the preliminary balance sheet.

(b) Based on the results in (a), the CFO requested that $20,000 of cash be used to pay off the balance of the Accounts Payable account on December 31, 2017. Calculate the new current ratio and working capital after the company takes these actions.

(d) Was it unethical for the CFO to take these steps?

Reference no: EM131822981

Questions Cloud

Show the effects of the previous transactions : Nancy Tercek started a delivery service, Tereek Deliveries, on June 1, 2017. Show the effects of the previous transactions on the accounting equation

Calculate wilson companys weighted average cost of capital : Calculate the Wilson company's weighted average cost of capital. Use the dividend discount model. Show calculations in Microsoft Word.

Different selection stages and job search needs : What are appropriate examination methods (tests) for different selection stages and job search needs, such as psychological, general skills and performance.

Discuss about the persistent depressive disorder : Based on your research, do you think the media has portrayed the disorder you selected in an unbiased manner or is it sensationalized?

Calculate the current ratio and working capital : The chief financial officer (CFO) of Myeneke Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2017.

Discusses how accounting principles used : Discusses how accounting principles used in the financial statements affect your analytical measures

Influence of intimate partner abuse on children : Some states have a presumption against awarding custody to a parent who perpetrates domestic violence? Why or why not? What does the research

Calculate the free cash flow for each year : Suppose the following data were taken from the 2017 and 2016 financial statements of American Eagle Outfitters.

Calculate the net benefit cost of accepting the order : Calculate the net benefit cost of accepting the order from the German business

User Account

All Pages