Homework SourseFor Taylor Corporation the working capital at the end of the
For Taylor Corporation, the working capital at the end of the current year is $10,000 more than the working capital at the end of the preceding year, reported as follows:
Year 2
Year 1
Current assets:
Cash, marketable securities, and receivables
$ 80,000
$ 84,000
Inventories
120,000
66,000
Total current assets
$200,000
$150,000
Current liabilities
100,000
60,000
Working capital
$100,000
$ 90,000
Has the current position of Taylor Corporation improved? Explain
| Year 2 | Year 1 | |
| Current assets: | ||
| Cash, marketable securities, and receivables | $ 80,000 | $ 84,000 |
| Inventories | 120,000 | 66,000 |
| Total current assets | $200,000 | $150,000 |
| Current liabilities | 100,000 | 60,000 |
| Working capital | $100,000 | $ 90,000 |
Solution
current ratio in Year 1 = 150/60 = 2.5
current ratio in Year 2 = 200/100 = 2
so the current ratio has decline indicating weakening in liquidity
