The Following Information Is Summarized from the Balance Sheets of Gear

question 115

Essay

The following information is summarized from the balance sheets of Gear Mart Corporation and Function Junction,Inc.at December 31,2017:
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$\begin{array}{lrr}&\text { Gear Mart }&\text { Function Junction }\\\text { Current assets: }\\\text { Cash and cash equivalents } & \$ 340,800 & \$ 100,200 \\\text { Short-term investments } & 12,000 & 7,600 \\\text { Accounts receivable, net } & 377,000 & 42,000 \\\text { Notes receivable, net } & 36,300 & 18,000 \\\text { Other current assets } & 207,400 & 40,000 \\\quad \text { Total current assets } & \$ 973,500 & \$ 207,800\\\\\text { Current liabilities } & \$ 860,900 & \$ 150,000 \\\text { Other liabilities } & 5,000,400 & 300,500 \\\text { Stockhol ders' equity } & 2,400,300 & 800,700\end{array}$ 1) Using the information provided above, compute the following for each company at December 31, 2018:
A. Working capital
B. Current ratio
C. Acid-test ratio
2) Comment briefly on the liquidity of each of these two companies. Which company appears to be the most liquid?

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Definitions:

Learning Organisations

Organizations that actively cultivate, facilitate, and encourage the continuous learning and development of their members to adapt and innovate.

Continuous Change

An ongoing process of adaptation and transformation in response to evolving conditions and challenges.

Performance Improvements

Performance improvements involve the enhancement of work processes, efficiency, and outputs in both individuals and organizations, often through strategic changes, training, or adopting new technologies.

Product Innovation

The process of developing and introducing new or significantly improved goods or services to meet consumer or market needs.