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Sportique Boutique reported the following financial data for 2012 and 2011. Instructions(a) Calculate the current ratio for Sportique Boutique for

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

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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.

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...
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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 2012 6 244 4 503 1 39 1 2011 3 798 2 619 1 45 1 b Current ra…View the full answer


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Financial Accounting Tools for business decision making

Financial Accounting Tools for business decision making

ISBN: 978-0470534779

6th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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Question Details
Chapter # 10- Reporting and Analyzing Liabilities
Section: Exercises
Problem: 16
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Question Posted: September 21, 2011 14:15:40
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