Flair Corporation is preparing its 2011 statement of financial position. The company records show the following related amounts at the end of the fiscal year, December 31, 2011:

Required:
1. Compute

(a) the amount of working capital and

(b) the current ratio (show computations). Why is working capital important to management? How do financial analysts use the current ratio?
2. Would your computations be different if the company reported \(\$ 250,000\) worth of contingent liabilities in the notes to its financial statements? Explain.

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Total assets Total non-current assets Notes payable (8%, due in 5 years) Trade payables Income taxos payable $530,000 362,000 15,000 56,000 14,000 Liability for withholding taxes 3.000 Deferred rent revenue. 7,000 Bonds payable (duc in 15 years) 90,000 Wages payable 7,000 Property taxes payable 3,000 Note payable (10%; due in 6 months; 12,000 Intorost payab o 400 Shareholders' equity 100,000