Question: Sportique Boutique reported the following financial data for 2012 and 2011. Instructions(a) Calculate the current ratio for Sportique Boutique for 2012 and 2011.(b) Suppose that

Sportique Boutique reported the following financial data for 2012 and 2011.

SPORTIQUE BOUTIQUE Balance Sheet (partial) September 30 (in thousands) 2012 2011 Current

Instructions(a) Calculate the current ratio for Sportique Boutique for 2012 and 2011.(b) Suppose that at the end of 2012, Sportique Boutique used $1.5 million cash to pay off $1.5 million of accounts payable. How would its current ratio change?(c) At September 30, Sportique Boutique has an undrawn operating line of credit of $12.5 million. Would this affect any assessment that you might make of Sportique Boutique??s short-term liquidity?Explain.

SPORTIQUE BOUTIQUE Balance Sheet (partial) September 30 (in thousands) 2012 2011 Current assets Cash and short-term deposits Accounts receivable $2,574 2,147 1,201 $1,021 1,575 Inventories 1,010 Other current assets 322 192 $6,244 Total current assets $3,798 Current liabilities $4,503 $2,619

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a Current ratio 20126244 4503 1391 20113798 2619 1451 b Current ratio 6244 ... View full answer

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