3. The balance sheet of Delray Inc. includes the following items:

Cash	$ 21,500
Accounts receivable	12,400
Inventory	45,300
Prepaid insurance	1,800
Land	80,000
Accounts payable	49,000
Salaries payable	1,625
Capital stock	105,100
Retained earnings	5,700

Required: (1) Determine the current ratio and working capital. (2) What does the composition of the current assets tell you about Delrays liquidity? (3) What other information do you need to fully assess Delrays liquidity?

ANSWER:

3. The balance sheet of Delray Inc. includes the following items:

Cash	$ 21,500
Accounts receivable	12,400
Inventory	45,300
Prepaid insurance	1,800
Land	80,000
Accounts payable	49,000
Salaries payable	1,625
Capital stock	105,100
Retained earnings	5,700

Required: (1) Determine the current ratio and working capital. (2) What does the composition of the current assets tell you about Delrays liquidity? (3) What other information do you need to fully assess Delrays liquidity?

ANSWER:

11 . . Ini Inl abe X2 X? A y A E SE 3. The balance sheet of Delray Inc. includes the following items: Cash $ 21,500 Accounts receivable 12,400 Inventory 45,300 Prepaid insurance 1,800 Land 80,000 Accounts payable 49,000 Salaries payable 1,625 Capital stock 105,100 Retained earnings 5,700 Required: (1) Determine the current ratio and working capital. (2) What does the composition of the current assets tell you about Delray's liquidity? (3) What other information do you need to fully assess Delray's liquidity