Question
Working Capital and Current Ratio The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: December 31 Year 2
Working Capital and Current Ratio The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: December 31 Year 2 Year 1 Current assets $ 169,723 $ 122,886 Current liabilities 40,701 30,119 a. Compute the working capital and the current ratio as of December 31, Year 2 and Year 1. Enter working capital amounts in thousands of dollars. Round "current ratio" answers to two decimal places. December 31 Year 2 Year 1 Working capital $ 112,799 X $ 81,485 X Current ratio 3.94 X 3.87 X b. What conclusions concerning the company's ability to meet its financial obligations can you draw from part (a)? Under Armour's working capital increased by $ 31,314 during Year 2. The current ratio increased in Year 2. Because Year 2's current ratio indicates a strong term creditors should not be liquidity position, the short- concerned about receiving payment from Under Armour.
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