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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

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.)

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