Sportique Boutique reported the following financial data for 2012 and 2011.
|
SPORTIQUE BOUTIQUE |
||
|
2012 |
2011 |
|
|
Current assets |
||
|
Cash and short-term deposits |
$2,574 |
$1,021 |
|
Accounts receivable |
2,147 |
1,575 |
|
Inventories |
1,201 |
1,010 |
|
Other current assets |
322 |
192 |
|
Total current assets |
$6,244 |
$3,798 |
|
Current liabilities |
$4,503 |
$2,619 |
Instructions
(a) Calculate the current ratio for Sportique Boutique for 2012 and 2011.
(b) Suppose that at the end of 2012, Sportique Boutique used $1.5 million cash to pay off $1.5 million of accounts payable. How would its current ratio change?
(c) At September 30, Sportique Boutique has an undrawn operating line of credit of $12.5 million. Would this affect any assessment that you might make of Sportique Boutique”s short-term liquidity? Explain.