FA12

Working Capital and Short-Term Liquidity Ratios

Favor Company has a current ratio of 1.95 on December 31. On that date the companys current assets are as follows:

Cash and cash equivalents	$39,200
Short-term investments	121,800
Accounts receivable (net)	175,000
Inventory	249,900
Prepaid expenses	16,100
Current assets	$602,000

Favor Companys current liabilities at the beginning of the year were $273,000 and during the year its operating activities provided a cash flow of $50,745. a. What are the firms current liabilities on December 31? (Round to the nearest dollar.) $ b. What is the firms working capital on December 31? $ c. What is the quick ratio on December 31? (Round to two decimals.) d. What is Bells operating-cash-flow-to-current-liabilities ratio? (Round to two decimals.)