11) Team Shirts has $233,000 in total current assets and $141,500 in total current liabilities.
1. Calculate the current ratio (rounded to one decimal place) for Team Shirts.
2. Is this a more favorable ratio than 0.9 to 1?
12) Evaluate the following information for Team Shirts.
Part A:
Calculate the current ratio for Team Shirts (round to two decimal places).
Part B:
Is the ratio acceptable or unacceptable? Why?
Part C:
Advise Team Shirts how to improve the ratio.
AssetsLiabilities and shareholders' equity
Cash$ 10,000Accounts payable$ 20,750
Accounts receivable2,030 Wages payable1, 220
Supplies180Notes payable (due in 2 years)8,000
Prepaid insurance2,000
Equipment25,000Common stock100,000
Building110,000Retained earnings19,240
13) Ima Knerd is happy with the progress of her computer repair business. She has made a profit in each of the past six months. However, her accountant is worried because the current ratio for the business is 0.80. Explain to Ima why this is a concern.
14) Evaluate the following information for Team Shirts:
Part A:
Calculate the current ratio for Team Shirts (round to two decimal places).
Part B:
Is the ratio acceptable or unacceptable? Why?
Part C:
Advise Team Shirts how to improve the ratio.
AssetsLiabilities and shareholders' equity
Cash$ 9,000Accounts payable$ 10,750
Accounts receivable4,430 Wages payable250
Supplies2,690Common stock6,000
Prepaid insurance3,000Retained earnings2,120
15) Evaluate the following information for Team Shirts.
Part A:
Calculate the current ratio for Team Shirts. (Round to two decimal places.)
Part B:
Is the ratio acceptable or unacceptable?
Part C:
Advise Team Shirts how to improve the ratio.
AssetsLiabilities and shareholders' equity
Cash$ 8,000Accounts payable$ 13,750
Accounts receivable7,030 Wages payable3, 220
Supplies980Notes payable (due in 2 years)20,000
Prepaid insurance3,000
Equipment35,000Common stock120,000
Building120,000Retained earnings17,040