Tutorial 5

4 NJT Company

a) 2015 2016 2017

Total Current Assets $ 16,950 $ 21,900 $ 22,500
Total Current Liabitilies $ 9,000 $ 12,600 $ 12,600
Inventory $ 6,000 $ 6,900 $ 6,900

Current ratio 1.88 1.74 1.79

Quick ratio 1.22 1.19 1.24
Net working Capital $ 7,950 $ 9,300 $ 9,900

b) This company is functioning well during 2015 to 2018, its current ratio are greater than 1.0 which mean it is well-posi
In 2017, this company reached its peak because its quick ration n net working capital are the highest among these ye

c)
This information is useful for determining how well a company is managing its assets and liabilities. If a business
can increase its turnover, it can theoretically generate a larger profit, since it can fund operations with less debt,
thereby reducing interest costs.
 Current ratio = Current assets / current liabilites
2018 Quick ratio = (Cash + Short-term investments + Net
$ 27,000 current reicables) / current liabilites
$ 17,400 or
$ 7,200 (Current assets - Inventory) / current liabilites

1.55 Net working Capital = Current assets - Current Liability

1.14
$ 9,600

ter than 1.0 which mean it is well-positioned to cover its current or short-term liabilites
capital are the highest among these years

assets and liabilities. If a business

n fund operations with less debt,