Working Capital and Current Ratio
The balance sheet of Kapinski Inc. includes the following items:
|
Cash
|
$23,000
|
Accounts payable
|
$ 84,900
|
|
Accounts receivable
|
43,000
|
Salaries payable
|
3,200
|
|
Inventory
|
75,000
|
Capital stock
|
100,000
|
|
Prepaid insurance
|
2,800
|
Retained earnings
|
35,700
|
|
Land
|
80,000
|
|
|
|
Required
|
|
|
|
1. Determine the current ratio and working capital.
2. Kapinski appears to have a positive current ratio and a large net working capital. Why would it have trouble paying bills as they come due?
3. Suggest three things that Kapinski can do to help pay its bills on time.