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Jay Oullette, CEO of Bumper to Bumper, Inc., anticipates that his company's year-end balance sheet will show current assets of $12,855 and current liabilities of

Jay Oullette, CEO of Bumper to Bumper, Inc., anticipates that his company's year-end balance sheet will show current assets of $12,855 and current liabilities of $7,550. Mr. Oullette has asked your advice concerning a possible early payment of $3,790 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.)

b.1 Assume that Bumper to Bumper, Inc., had negotiated a short-term bank loan of $5,000 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.)

b.2 When would you recommend that the loan be taken? Choose correct answer

After the end of the year
Before the end of the year

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