Following are the current asset and current liability sections of the balance sh
ID: 2349469 • Letter: F
Question
Following are the current asset and current liability sections of the balance sheets for Freedom, Inc., at January 31, 2011 and 2010 (in millions):January 31, 2011 January 31, 2010
Current Assets
Cash $ 9 $ 6
Accounts receivable 7 10
Inventories 7 11
Total current assets $ 23 $ 27
Current Liabilities
Note payable $ 5 $ 5
Accounts payable 5 2
Other accrued liabilities 2 2
Total current liabilities $12 $ 9
Calculate the working capital and current ratio at each balance sheet date.
1/31/11 1/31/10
Working capital $ $
Current ratio
Current Liabilities
Explanation / Answer
1/31/11 Working capital = 23 million – 12 million = $11 million Current ratio = 23 million/12 million = 1.92 1/31/10 Working capital = 27 million – 9 million = $18 million Current ratio = 27 million/9 million = 3