Answer:
Explanation:
<u>Working Capital:</u>
Working Capital represents the capital available to an organisation to run its day to day expenses.
Formula= Current Assets-Current Liabilities
Total Current Assets= $45,210,000
Total Current Liabilities= $40,020,000
Working Capital= 45,210,000-40,020,000= $5,190,000
<u>Current Ratio</u>
This measures an organisation's ability to meet its financial obligations due within a year
Formula= Current Assets÷ Current Liablities
= 45,210,000÷40,020,000
= 1:13
<u>Acid-test Ratio</u>
The acid-test ratio is also known as the Quick Ratio. It represents a company's measure of liquidity and it indicates the company's ability to cover its short-term liabilities through its short-term Liquid (easily converted to cash) Assets.
Formula: (Current Asset-Inventory-Other Current Assets)÷ Current Liabilities
Current Asset- Inventory= 45,210,000-14,570,000-5,430,000= 25,210,000
Acid-test Ratio= 25,210,000÷ 40,020,000=0.63
Note: Other Current Assets were also deducted because we cannot easily decide whether they can be quickly or easily converted to cash or not.
