Question
3. Net working capital, working capital balances, and the current ratio Study the following balance sheet to help you prepare for your upcoming interview for
3. Net working capital, working capital balances, and the current ratio Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Praxis Corporation. Praxis Corporation Balance Sheet Cash $787,500 Accounts payable $1,890,000 Accounts receivable $2,756,250 Accruals $1,181,250 Inventory $4,331,250 Notes payable $1,653,750 Total current assets $7,875,000 Total current liabilities $4,725,000 Long-term debt $4,275,000 Total debt $9,000,000 Common equity $1,800,000 Net plant and equipment $7,125,000 Retained earnings $4,200,000 Total equity $6,000,000 Total assets $15,000,000 Total liabilities and equity $15,000,000 During your interview for an introductory-level analyst position at Praxis Corporation, the interviewer asks you to complete the following table using the information provided in the preceding balance sheet. Net Working Capital Current Ratio Assume that Praxis Corporation decides to acquire an additional $750,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause Praxiss current ratio to .
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