You have inherited money from your grandparents and a

friend #3837
You have inherited money from your grandparents and a friend suggests that you consider
buying shares in Galena Ski Products. Because you may need to sell the shares within the next
two years to finance your university education, you start your analysis of the company data by
calculating (1) working capital, (2) the current ratio, and (3) the quick ratio. Galena's statement
of financial position is as follows:Required:a. What amount of working capital is currently
maintained? Comment on the adequacy of this amount.b. Your preference is to have a quick
ratio of at least 0.80 and a current ratio of at least 2.00. How do the existing ratios compare with
your criteria? Based on these two ratios, how would you evaluate the company's current asset
position?c. The company currently sells only on a cash basis and had sales of $900,000 this
past year. How would you expect a change from cash to credit sales to affect the current and
quick ratios?d. Galena's statement of financial position is presented just before the start of
shipments for its fall and winter season. How would your evaluation change if these balances
existed in late February, following completion of its primary business for the skiing season?e.
How would Galena's situation as either a public company or private company affect your
decision to invest?View Solution:
You have inherited money from your grandparents and a friend

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