The following schedule lists the current assets and current liabilities of Iago Department Stores for the firm€™s fiscal years ending in February for two recent years. Dollars are presented in millions.

Required:
(a) Determine Iago€™s working capital and current ratio at year-end of Year 1 and Year 2.
(b) Did Iago€™s liquidity improve or weaken between the end of Year 1 and the end of Year 2? Explain.

Transcribed Image Text:

December 1 Cash Cash equivalent Accounts receivable Merchandise inventory Year 1 210 64 3,876 120 $4,270 Year 2 $ 34 278 4,162 190 $4,664 Total Current Assets Short-term debt Current maturities of 156 long-term debt Accounts Accrued expenses Income tax payable 510 1,046 1,820 238 $3,770 170 1,930 1,542 186 $3,828 payable Total Current Liabilities