The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc.,
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Question:
The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc., as of January 31, 2017 and 2016 (in millions):
January 31, 2017 | January 31, 2016 | |||||||||
Current assets | ||||||||||
Money | ps | 12 | ps | 9 | ||||||
accounts receivable | 5 | 8 | ||||||||
inventories | 7 | 11 | ||||||||
Total current assets | ps | 24 | ps | 28 | ||||||
current liabilities | ||||||||||
Pay | ps | 6 | ps | 6 | ||||||
Accounts payable | 5 | 2 | ||||||||
Other accrued liabilities | 3 | 3 | ||||||||
Total current liabilities | ps | 14 | ps | 11 | ||||||
Required:
a. Calculate the working capital and the current ratio at each balance sheet date.
b. Evaluate the company's liquidity at each balance sheet date.
C. Assume the business operated at a loss for the year ending January 31, 2017. How might cash have increased during the year?
Changes in a company's cash position and its profitability are not directly related under the accrual (or accrual) basis of accounting. | |
Changes in a company's cash position and its profitability are not directly related under the cash basis of accounting. |
Related Book For
Accounting What the Numbers Mean
ISBN: 978-1259535314
11th edition
Authors: David Marshall, Wayne McManus, Daniel Viele
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