Financial Statement Ratios
The following items, in alphabetical order, are available from the records of Quinn Corporation as of December 31, 2014 and 2013:
December 31, 2014 December 31, 2013
|
Accounts payable
|
$10,500
|
$ 6,500
|
|
Accounts receivable
|
16,500
|
26,000
|
|
Cash
|
12,750
|
11,800
|
|
Interest receivable
|
200
|
0
|
|
Note receivable, due 12/31/2016
|
12,000
|
12,000
|
|
Office supplies
|
900
|
1,100
|
|
Prepaid insurance
|
400
|
250
|
|
Salaries payable
|
1,800
|
800
|
|
Taxes payable
|
10,000
|
5,800
|
Required
1. Calculate the following as of December 31, 2014, and December 31, 2013:
a. Working capital
b. Current ratio
2. On the basis of your answers to (1), comment on the company's relative liquidity at the beginning and end of the year. Explain the change in the company's liquidity from the beginning to the end of 2014.