Question 1

Part A. Your first challenge is to advise Kaj on what has been happening with Scandi Home Furnishings from a liquidity perspective.

Part B. Kaj was particularly concerned by the drop in cash from $50,000 in 2017 to $10,000 in 2019. Calculate the average current ratio, the quick ratio, and the NWC-to-total-assets ratio for 20172018 and 20182019. What has happened to Scandis liquidity position?

Part C. Kaj should be interested in knowing whether Scandi has been building or burning cash. Compare the cash build, cash burn, and the net cash build/burn positions for 2018 and 2019. What, if any, changes have occurred?

SCANDI HOME FURNISHINGS, INC. *350,000 shares of common stock were issued to Kaj Rasmussen and the venture investors when Scandi Home Furnishings was incorporated in mid-2016