Current assets and current liabilities for HQ Properties Company follow:
2018 | 2019
Current assets $2,175,000 | $1,900,000
Current liabilities. 1,500,000 | 1,250,000
a. Determine the working capital and current ratio for 2019 and 2018.
b. Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?
Answer:
a.
Current assets...............
Current liabilitites.........
Working capital............
Current ratio..................
1,250,000
$ 650,000
1.52
($1,900,000 ÷ $1,250,000)
b. The decrease from 1.52 to 1.45 indicates an unfavorable change.