Link to Text These selected condensed data are taken from a

Link to Text

These selected condensed data are taken from a recent balance sheet of Sanson Company (in millions of dollars). Cash $7.2 Accounts receivable 14.4 Inventory 18.0 Other current assets 11.1 Total current liabilities $24.8 Additional information: Current liabilities at the beginning of the year were $35.6 million.

Solution

Total current assets=Cash+AR+Inventory+AR

=(7.2+14.4+18+11.1)=$50.7

1.WC=Total current assets-Total current liabilities

=(50.7-24.8)=$25.9 million

2.Current ratio=Total current assets/Total current liabilities

=(50.7/24.8)=2.04:1(Approx).