Crane Company provides you with the following balance sheet information as of De
ID: 2490714 • Letter: C
Question
Crane Company provides you with the following balance sheet information as of December 31, 2017. In addition, Crane reported net income for 2017 of $15,800, income tax expense of $3,100, and interest expense of $1,300. Assume that at the end of 2017, Crane used $2,900 cash to pay off $2,900 of accounts payable. How would the current ratio and working capital have changed? (Round current ratio to 2 decimal places, e.g. 2.75. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Explanation / Answer
b) Current Assets 12400 Current liabilities 11900 before paying of account payable Current ratio = Current Asset / Current liability = 12400 / 11900 = 1.04 Working capital = Current Asset - Current liability = 12400 - 11900 = 500 after paying of accounts payable Current Assets (12900-2900) 9500 Current liabilities ( 11900 - 2900) 9000 Current ratio = Current Asset / Current liability = 9500 / 9000 = 1.06 Working capital = Current Asset - Current liability = 9500 - 9000 = 500