Use the following excerpt of Dragonfly Corporation's asset balances to compute Dragonfly's working capital and current ratio
Question:
Use the following excerpt of Dragonfly Corporation's asset balances to compute Dragonfly's working capital and current ratio for 2019 and 2018. Comment on Dragonfly's liquidity and changes in liquidity from 2018 to 2019. Dragonfly's current liabilities are $89,754 million and $82,271 million in 2019 and 2018. respectively.
Assets (dollarsin millions) 2019 2018 Cuirent assets $ 13,420 $ 19,355 Cash and cash equivaents Marketable secur ties 7,623 2,394 Accounts rece vab e trade – net 22,120 20 872 47,415 Inventories 45,630 Prepaid expenses and other receivables 1.264 1,312 89 515 Total current assets 91,890 Property, p ant andequ pment – net 67045 65 762 Other assets 3,773 3770 Total assets $162,708 $159,047
Step by Step Answer:
2019 2018 Working Capital Computation Total current assets 91890 ...View the full answer
Intermediate Accounting
ISBN: 978-0134730370
2nd edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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