The balance sheet of Evanston Inc. includes the following items:
Required:
1 Determine the current ratio and working capital.
2 What does the composition of the current assets tell you about Evanston's liquidity?
3 What other information do you need to fully assess Evanston's liquidity?
Definitions:
Equity Method
An accounting technique used by companies to assess the profits earned through their investments in other companies.
Unrealized Loss
A loss that results from holding onto an asset that has decreased in price, but has not yet been sold.
Stockholders' Equity
The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership interest of shareholders.
Equity Securities
Financial instruments representing ownership in a company, such as stocks, which provide a claim to a portion of the company's profits and assets.
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