Current position analysis

The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:

Line Item Description Current Year Previous Year

Current assets:

Cash $$528,100$ $$455,000$

Marketable securities $695,600536,900$

Accounts and notes receivable $($net$)856,300646,100$

Inventories $2,252,9001,709,800$

Prepaid expenses $1,114,1001,063,100$

Total current assets $$5,447,000$ $$4,410,900$

Current liabilities:

Accounts and notes payable $($short$-$term$)$ $$942,500$ $$780,000$

Accrued liabilities $357,500390,000$

Total current liabilities $$1,300,000$ $$1,170,000$

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a$.$ Determine for each year $(1)$ the working capital, $(2)$ the current ratio, and $(3)$ the quick ratio. Round the ratios to one decimal place and the working capital to the nearest dollar.

Line Item Description Current Year Previous Year

$1.$ Working capital $fill in the blank $2$

$4,147,000$

$fill in the blank $3$

$3,240,900$

$2.$ Current ratio fill in the blank $4$

$4\mathrm{.}2$

fill in the blank $5$

$3\mathrm{.}8$

$3.$ Quick ratio fill in the blank $6$

$2\mathrm{.}5$

fill in the blank $7$

$2\mathrm{.}3$

b$.$ The liquidity of Nilo has fill in the blank $1$ of $3$

improved

from the preceding year to the current year. The working capital, current ratio, and quick ratio have all fill in the blank $2$ of $3$

increased

$.$ Most of these changes are the result of a$($n$)$ fill in the blank $3$ of $3$

increase

in current assets relative to current liabilities.