Ratio analysis work out the following exercisesa a company

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Ratio Analysis: Work out the following exercises:

a) A company with a current ratio of 2.5:1 has current liabilities of $130,000. Indicate whether the individual transactions described below increase or decrease the current ratio, or the amount of working capital, and by how much in each case. Treat each item separately.

- Purchase of $10,000 worth of merchandise on account.

- Company collects on $5,000 of account receivable.

- Acquisition of $40,000 machine, paid for with $10,000 cash and balance due in 18 months (lump sum).

-Company pays dividends, $10,000 in cash, $10,000 is stock

Reference no: EM13382743

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