Current Ratio Baldwin Corp. reported the following current accounts at the end of two recent years:

December 31, 2010 December 31, 2009 Cash $ 3,000 $ 6,000 Accounts receivable 15,000 10,000 Inventory 12,000 8,000 Accounts payable 12,000 7,000 Wages payable 2,000 1,000 Notes payable 6,000 4,000 Required 1. Compute Baldwin’s current ratio at the end of each of the two years.

2. How has Baldwin’s liquidity changed at the end of 2010 compared to the end of 2009?

3. Comment on the relative composition of Baldwin’s current assets at the end of 2010 compared to the end of 2009.

AppendixLO1