Part I

(1) What is the current ratio and what does it mean? How is it calculated?

(2) Please use the information below to calculate the current ratio for Niles Co. for 20Y4 and 20Y3. Round your answers to one decimal place.

	20Y4	20Y3
Cash	$ 414,000	$ 320,000
Marketable securities	496,800	336,000
Accounts receivable	649,200	464,000
Inventories	351,900	272,000
Prepaid expenses	188,100	208,000
Land	820,000	820,000
Buildings	695,000	695,000
Equipment	230,500	180,200
Total Assets	$ 3,845,500	$ 3,295,200
Accounts payable	$ 675,000	$ 600,000
Wages payable	225,000	200,000
Bonds payable (long-term)	500,000	500,000
Total Liabilities	$ 1,400,000	$ 1,300,000
Total Equity	$ 2,445,500	$ 1,995,200

(3) Interpret your calculations for Niles Co. Explain whether the company's current ratio is more or less favorable in 20Y4 than in 20Y3.

(4) What types of people or entities would be most interested in a company's current ratio? Please explain.

Part II

(1) What is a classified balance sheet and why is it important to classify assets and liabilities?

(2) Is classifying a balance sheet more trouble than it's worth?

Please explain your answers and support your position.