The Gap Inc. operates over 3,000 specialty retail stores under such brand names as GAP, Old Navy,
Question:
1. Compute working capital for Years 2 and 1.
2. Compute the current ratio for Years 2 and 1. Round to one decimal place.
3. Compute the quick ratio for Years 2 and 1. Round to one decimal place.
4. Analyze and assess any changes in liquidity for Years 2 and1.
Year 2 Year 1 Current assets Cash Accounts receivable Inventory Prepaid and other current assets S1,885 297 1,615 512 $4,309 $2,128 $1,661 205 1,620 440 $3,926 $2,095 Total current assets Total current liabilities
Step by Step Answer:
1 Year 2 2181 4309 2128 Year 1 1831 3926 2095 2 Year 2 20 4309 2128 Year 1 19 3926 2095 3 ...View the full answer
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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