Reference no: EM132495634

You have inherited money from your grandparents, and a friend suggests that you consider buying shares in Galena Ski Products, which manufactures skis and bindings. Because you may need to sell the shares within the next two years to finance your university education, you start your analysis of the company data by calculating (1) working capital, (2) the current ratio, and (3) the quick ratio.

Galena's statement of financial position is as follows:

Current assets

Cash                                 $161,800

Inventory                           174,100

Prepaid expenses                  19,900

Non-current assets

Land                                   45,500

Building and equipment         133,700

Other                               16,000

Total                              $551,000

Current liabilities              $155,400

Long-term debt               190,100

Share capital                   85,300

Retained earnings             120,200

Total                                $551,000

Question 1) What amount of working capital is currently maintained?

Question 2) Your preference is to have a quick ratio of at least 0.80 and a current ratio of at least 2.00. How do the existing ratios compare with your criteria? (Round answers to 2 decimal places, e.g. 18.42.)

a) Current ratio (does it exceed the criteria)

b) Quick ratio (does it exceed the criteria)