Assets

Liabilities

Current

Current

Accounts Receivable

$$80,000$

Operating LOC $$40,000$

Cash

$$15,000$

AP$-$Supply Store $$30,000$

Grain Inventory

$$60,000$

Current portion

RE loan

$$30,000$

Non current

Non current

Land

$$1,500,000$ Real Estate Loan $$800,000$

Equipment$/$Machinery $$500,000$

Total Liabilities

Total Assets

Owner's Equity

How could working capital be misleading in this example if a simple ratio analysis is done?

the grain in storage is worth more than the balance sheet indicates

A large part of current liabilities are part of the real estate loan which really isn't current debt

the customers the farmer has extended credit $($accounts receivable$)$ take a very long time to pay as

there are no terms $($due dates$)$ on their accounts

The farm supply store allows credit to be extended to $60$ days