Jay Oullette, CEO of Bumper to Bumper, Inc., anticipates that his company's year-end balance sheet will show current assets of $12,612 and current liabilities of $7,530. Mr. Oullette has asked your advice concerning a possible early payment of $3,770 of accounts payable before year-end, even though payment isn't due until later.

Required:

a. Calculate the firm's working capital and current ratio under each situation. (Round "Current ratio" answers to 1 decimal place.)

Do Not Prepay Accounts Payable	Prepay Accounts Payable
Working capital	$5,082
Current ratio

b.1 Assume that Bumper to Bumper, Inc., had negotiated a short-term bank loan of $7,000 that can be drawn down either before or after the end of the year. Calculate working capital and the current ratio at year-end under each situation, assuming that early payment of accounts payable is not made. (Round "Current ratio" answers to 1 decimal place.)

Without Loan	With Loan
Working capital
Current ratio