Anyone can help me for this(question 7) please, need it asap!!! (finance-working
ID: 2818250 • Letter: A
Question
Anyone can help me for this(question 7) please, need it asap!!! (finance-working capital management) THANKS!!!!!!!!!!
7. Use JW Inc.s financial statements to calculate the following The current ratio, quick ratio, NWC, and WCR. Discuss the observed 2-year trend The CCC and its components. Discuss the observed 2-year trend a. b. JW, Inc.: Income Statement 2016 2015 Sales COGS Gross Profit Operating Expenses Depreciation EBIT Interest Expense EBT Taxes NI Dividends ARE 5,700.00 $ 4,560.00) 1,140.00 ($ 500.00) ($ 27.00) $613.00 ($ 35.00) 578.00 ($ 231.20) $ 346.80 5,050.00 $ 4,040.00) $1,010.00 ($ 420.00) $ 26.00) $394.00 ($30.00) 364.00 ($145.60) $ 218.40 $ 346.80 $ 218.40Explanation / Answer
As per rules I will answer the first 4 sub parts of the question
1: Current ratio = Current assets/ current liabilities
2016=1514.8/371= 4.08
2015=960/360=2.67
The company’s current ratio has improved over the year indicating higher liquidity.It has more current assets in 2016 to meet its short term liabilities.
2: Quick ratio =(Cash + Receivables)/ current liabilities
2016= (714.8+500)/371 = 3.27
2015=(120+500)/360= 1.7
The company’s quick ratio has improved over the year indicating higher liquidity. It has more quick assets in 2016 to meet its short term liabilities.
3: NWC= Current assets-current liabilities
2016=1514.8-371= 1143.8
2015=960-360= 600
The company has higher net working capital available on hand in 2016. This indicates that it has higher liquidity.
4: WCR= Current assets/ current liabilities
2016=1514.8/371= 4.08
2015=960/360=2.67
The company’s working capital ratio has improved over the year indicating higher liquidity. It has more current assets in 2016 to meet its immediate liabilities.