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Calculate working capital and the current ratio at year-end

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Management of Rivers Co. anticipates that its year-end balance sheet will show current assets of $12,801 and current liabilities of $7,620. Management is considering paying $3,830 of accounts payable before year-end even though payment isn't due until later.

Required:
a. Calculate the firm's working capital and current ratio under each situation. (Round your "current ratio" to 2 decimal places. Do not prepay account payable prepay account payable

b. Assume that Rivers Co. had negotiated a short-term bank loan of $6,000 that can be drawn down either before or after the end of the year. Calculate working capital and the current ratio at year-end under each situation, assuming that early payment of accounts payable is not made. (Round your "current ratio" to 2 decimal places.

Reference no: EM131764912

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