Solvency Measures- The Short-Term Creditor Working Capital and Current Ratio 2003 2002 Current assets $550,000 $533, 000 Current liabilities 210,000 243000 c15-11
C15- 11 Solvency Measures — The Short-Term Creditor Current assets $550,000 $533,000 Current liabilities 210,000 243,000 Working Capital and Current Ratio 2003 2002
Solvency Measures- The Short-Term Creditor Working Capital and Current Ratio 2003 2002 Current assets $550,000 $533, 000 Current liabilities 210.000 243,000 Working capital $340,000 $290,000 Use: To indicate the ability to meet currently maturing obligations c15-12
C15- 12 Solvency Measures — The Short-Term Creditor Working Capital and Current Ratio Use: To indicate the ability to meet currently maturing obligations. 2003 2002 Current assets $550,000 $533,000 Current liabilities 210,000 243,000 Working capital $340,000 $290,000
Solvency Measures- The Short-Term Creditor Working Capital and Current Ratio 2003 2002 Current assets $550,000 $533, 000 Current liabilities 210,000 243, 000 Divide Working capital $340,000 $290,000 current Current ratio 2.6 2.2 assets by current Use: To indicate the ability to meet liabilities currently maturing obligations c15-13
C15- 13 Solvency Measures — The Short-Term Creditor Current assets $550,000 $533,000 Current liabilities 210,000 243,000 Working capital $340,000 $290,000 Current ratio 2.6 2.2 Working Capital and Current Ratio Use: To indicate the ability to meet currently maturing obligations. Divide current assets by current liabilities 2003 2002
Solvency Measures- The Short-Term Creditor Acid-Test Ratio 2003 2002 Quick assets: Cash $90,500$64,700 Marketable securities 75,00060,000 Accounts receivable(net) 115,000 120,000 Total $280,500$244700 Current liabilities $210,000$243000 c15-14
C15- 14 Solvency Measures — The Short-Term Creditor Quick assets: Cash $ 90,500 $ 64,700 Marketable securities 75,000 60,000 Accounts receivable (net) 115,000 120,000 Total $280,500 $244,700 Current liabilities $210,000 $243,000 Acid-Test Ratio 2003 2002
Solvency Measures- The Short-Term Creditor Acid-Test Ratio 2003 2002 Quick assets: Cash $90,500$64,700 Marketable securities 75,00060,000 Accounts receivable(net) 115,000 120,000 Total $280,500$244700 Current liabilities $210000$243,000 Acid-test ratio 1.3 1.0 Use: To indicate instant debt-paying ability. c15-15
C15- 15 Solvency Measures — The Short-Term Creditor Acid-Test Ratio Use: To indicate instant debt-paying ability. 2003 2002 Quick assets: Cash $ 90,500 $ 64,700 Marketable securities 75,000 60,000 Accounts receivable (net) 115,000 120,000 Total $280,500 $244,700 Current liabilities $210,000 $243,000 Acid-test ratio 1.3 1.0