19) Working Capital is the excess of the current assets of a business over its current liabilities: Working Capital Current Assets-Current Liabilities Positive working capital implies that a business is able to pay its current liabilities and is solvent. The Current Ratio is another means of expressing the relationship between current assets and current liabilities, computed by dividing Current Assets by Current Liabilities: Current Ratio Current Assets/Current Liabilities (as shown on page 249 on your text) Historically, companies have considered a current ratio of 2:1 to be adequate. In recent years, many healthy companies have maintained a current ratio well below 2:1 (but greater than 1:1) by improving management of their current assets and liabilities The following data (in thousands) are taken from financial statements for Starbucks Corp.: as of 9/28/2008 as of 9/27/2009 $1,748,000 $2,035,800 Current Assets $1,581,000 $2,189,700 Current Liabilities a) Compute the working capital as of Sept. 27, 2009 and Sept. 28, 2008. Round to 2 decimal places. b) Compute the current ratio as places. of Sept. 27, 2009 and Sept. 28, 2008. Round to 2 decimal c) What conclusions concerning the Starbuck Company's ability to meet its financial obligations you draw from part (a)? can