Selected financial information is available for Jones Co. (a) Calculate the working capital for Jones Co. for
Question:
(a) Calculate the working capital for Jones Co. for the three years
(b) Calculate the current ratio of Jones Co. for the three years and comment on it.
Current assets Current liabilities Year 1 95,000 65,000 Year 2 150,000 100,000 Year 3 200,000 95,000
Step by Step Answer:
a Working capital Current assets Current liabilities Year 1 95000 65000 30000 Y...View the full answer
Accounting Principles
ISBN: 978-1119048503
7th Canadian Edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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