The following balance sheet data for Pecan Company are shown below.

The following balance sheet data for Pecan Company are shown below.



2014 2013
Current assets $1,467,000 $1,269,000
Current liabilities 815,000 675,000


a. Determine the working capital and current ratio for 2014 and 2013.
b. Does the change in the current ratio from 2013 to 2014 indicate a favorable or an unfavorable trend?


Answer:

a.
Current assets……………
Current liabilities………
Working capital…………
Current ratio……………
2014
$1,467,000
815,000
$ 652,000
1.80
($1,467,000 ÷ $815,000)
2013
$1,269,000
675,000
$ 594,000
1.88
($1,269,000 ÷ $675,000)
b. The change from 1.88 to 1.80 indicates an unfavorable trend.