S12-5. (Learning Objective 4: Evaluating the trend in a company’s current ratio) Examine the financial data of Jacob Corporation.

Show how to compute Jacob’s current ratio for each year 20X4 through 20X6. Is the company’s ability to pay its current liabilities improving or deteriorating?

Transcribed Image Text:

Year Ended December 31 20X6 20X5 20X4 Operating Results Net income... Per ordinary share. Percent of sales... Return on average shareholders' equity... $220 $120 $119 $1.23 $0.93 $0.63 15.6% 17.6% 19.6% 14.0 17.0 20.0 Financial Position Current assets.. Current liabilities. Working capital Current ratio. $560 $455 $ 445 360 333 356 200 112 89 1.56 1.37 1.25