Question
Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Extensive Enterprise Inc.. Extensive Enterprise Inc.
Study the following balance sheet to help you prepare for your upcoming interview for an entry-level analyst position at Extensive Enterprise Inc..
Extensive Enterprise Inc. Balance Sheet
Cash | $525,000 | Accounts payable | $1,260,000 | |
Accounts receivable | $1,837,500 | Accruals | $787,500 | |
Inventory | $2,887,500 | Notes payable | $1,102,500 | |
Total current assets | $5,250,000 | Total current liabilities | $3,150,000 | |
Long-term debt | $17,850,000 | |||
Total debt | $21,000,000 | |||
Common equity | $4,200,000 | |||
Net plant and equipment | $29,750,000 | Retained earnings | $9,800,000 | |
Total equity | $14,000,000 | |||
Total assets | $35,000,000 | Total liabilities and equity | $35,000,000 |
During your interview for an introductory-level analyst position at Extensive Enterprise Inc., the interviewer asks you to complete the following table using the information provided in the preceding balance sheet.
Net Working Capital (5,250,00, 35,000,000, 3,150,000, 2,100,000) | |
Current Ratio ( 0.09, 0.25, 1.67, 11.11) |
Assume that Extensive Enterprise Inc. decides to acquire an additional $1,750,000 in inventories and pay using its accounts payable. Given the condition of the company noted in the balance sheet, this activity should be expected to cause Extensives current ratio to _______________ . ( Increase , Decrease or Stay the same)
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