Computation of current ratio and working capital

Reference no: EM1315909

Computation of Current ratio, Working capital, Acid-test ratio, Receivables turnover and Inventory turnover.

Boyle Corporation had the following comparative current assets and current liabilities:

	Dec. 31, 2002	Dec. 31, 2001
Current assets
Cash	$60,000	$30,000
Marketable securities	40,000	10,000
Accounts receivable	55,000	95,000
Inventory	110,000	90,000
Prepaid expenses	35,000	20,000

Total current assets	$300,000	$245,000
Current liabilities
Accounts payable	$140,000	$110,000
Salaries payable	40,000	30,000
Income tax payable	20,000	15,000

Total current liabilities	$200,000	$155,000

During 2002, credit sales and cost of goods sold were $750,000 and $400,000, respectively.

INSTRUCTIONS
Compute the following liquidity measures for 2002:

1. Current ratio.
2. Working capital.
3. Acid-test ratio.
4. Receivables turnover.
5. Inventory turnover.

Reference no: EM1315909

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