Baldwin Corp. reported the following current accounts at the end of two recent years:
December 31, 2012 December 31, 2011
Cash.....................................$ 3,000.............................$ 6,000
Accounts receivable...................15,000..............................10,000
Inventory...............................12,000...............................8,000
Accounts payable.....................12,000................................7,000
Wages payable..........................2,000................................1,000
Notes payable...........................6,000................................4,000
Required
1. Compute Baldwin's current ratio at the end of each of the two years.
2. How has Baldwin's liquidity changed at the end of 2012 compared to the end of 2011?
3. Comment on the relative composition of Baldwin's current assets at the end of 2012 compared to the end of 2011.