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(Answered) Working capital and liquidity ratios


Assume that during the first year of a corporation's operation, there were numerous purchases of identical items of merchandise. However, there was no change during the year in the prices paid for this merchandise. Under these special circumstances, how would the financial statements be affected by the choice between the FIFO and LIFO methods of inventory valuation?;We discussed working capital and liquidity ratios. Based on your readings please;Briely comment about the solvency of the company below.;2010 2009 2008;Assets;Current Assets;Cash And Cash Equivalents 1,156,000 911,000 1,225,000;Short Term Investments 4,328,000 4,246,000 3,104,000;Net Receivables 738,000 768,000 811,000;Inventory 594,000 557,000 525,000;Other Current Assets 291,000 309,000 270,000;Total Current Assets 6,838,000 6,642,000 5,935,000;Long Term Investments - - -;Property Plant and Equipment 15,082,000 15,476,000 15,735,000;Goodwill - - -;Intangible Assets - - 1,109,000;Accumulated Amortization - - -;Other Assets 3,168,000 3,320,000 2,396,000;Deferred Long Term Asset Charges - - -;Total Assets 25,088,000 25,438,000 25,175,000;Liabilities;Current Liabilities;Accounts Payable 3,241,000 3,103,000 6,702,000;Short/Current Long Term Debt 1,883,000 1,194,000 2,672,000;Other Current Liabilities 3,656,000 3,431,000 -;Total Current Liabilities 8,780,000 7,728,000 9,374,000;Long Term Debt 9,253,000 10,583,000 9,001,000;Other Liabilities 10,730,000 10,344,000 9,438,000;Deferred Long Term Liability Charges 270,000 272,000 297,000;Minority Interest - - -;Negative Goodwill - - -;Total Liabilities 29,033,000 28,927,000 28,110,000;Stockholders' Equity;Misc Stocks Options Warrants - - -;Redeemable Preferred Stock - - -;Preferred Stock - - -;Common Stock 339,000 339,000 285,000;Retained Earnings (5,607,000) (5,136,000) (3,461,000);Treasury Stock (367,000) (367,000) (367,000);Capital Surplus 4,445,000 4,399,000 3,785,000;Other Stockholder Equity (2,755,000) (2,724,000) (3,177,000);Total Stockholder Equity (3,945,000) (3,489,000) (2,935,000);Net Tangible Assets (3,945,000) (3,489,000) (4,044,000)
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Working capital and liquidity ratios

 


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