Calculate working capital and the current ratio at year-end

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Reference no: EM13599818

Management of Rivers Co. anticipates that its year-end balance sheet will show current assets of $12,828 and current liabilities of $7,500. Management is considering paying $3,770 of accounts payable before year-end even though payment isn't due until later.

Calculate the firm's working capital and current ratio under each situation.

Do Not Prepay Prepay
Accounts Payable Accounts Payable
Working capital $ $
Current ratio

a. Assume that Rivers Co. had negotiated a short-term bank loan of $7,000 that can be drawn down either before or after the end of the year. Calculate working capital and the current ratio at year-end under each situation, assuming that early payment of accounts payable is not made.

Without Loan With Loan
Working capital $ $

Reference no: EM13599818

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