Question

Suppose the following selected condensed data are taken from a recent balance sheet of Bob Evans Farms (in millions of dollars). Cash $ 30.3 Accounts receivable 19.8 Inventory 27.5 Other current assets 28.4 Total current assets $106.0 Total current liabilities $200.0 Compute working capital and the current ratio. (For working capital, enter answer in millions. If answer is negative enter it with a negative sign preceding the number e.g. -15.2 or in parentheses e.g. (15.2). Round current ratio to 2 decimal places, e.g. 0.78 : 1.)

Answer 1

Answer:

Working Capital = Current Assets - Current Liabilities

Working Capital = $106 million - $200 million

Working Capital = -$94 million

Current Ratio = Current Assets/Current Liabilities

Current Ratio = $106 million / $200 million

Current Ratio = 0.53 : 1