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Keisys Topical Kids Inc. had the following information for 2019 and 2020: Account 12/31/2020 12/31/2019 Cash and Cash Equivalents $12,000 $16,000 Short-Term Investments 11,000 5,000
Keisys Topical Kids Inc. had the following information for 2019 and 2020:
Account | 12/31/2020 | 12/31/2019 |
Cash and Cash Equivalents | $12,000 | $16,000 |
Short-Term Investments | 11,000 | 5,000 |
Current Receivables, net | 23,000 | 32,000 |
Inventory | 26,000 | 16,000 |
Prepaid Insurance | 2,000 | 3,000 |
Salaries Payable | 17,000 | 28,000 |
Short-Term Notes Payable | 12,000 | 16,000 |
Credit Sales for year | 320,000 | 210,000 |
Answer the following questions:
- Compute the Current Ratio for 2019 and 2020.
- What does the results of a current ratio measure?
- Did the Current Ratio improve and is Keisys Topical Kids Inc. in good financial condition?
- Are there weaknesses in using a current ratio?
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