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Balance Sheets as of Dec. 31, X1 and X2Liabilities andAssets:X1X2Owner’s EquityX1X2Current:Cash100150A/P100150A/R200250N/P200200Inventory300300Total Current300350Total Current600700Long term debt400420Fixed:Owner’s EquityNet P&E400500Common Stock5060Total Assets10001200Retained Earnings250370Total Liabilities &10001200Owner’s EquityIncome Statement as of Dec. 31, X2Revenue2000COGS1400EBIT500Interest100EBT400Taxes 200EAT (or NI)200Compute the quick ratio for this firm for year X2. Explain this value and explain why it is necessary to compute.Compute the net working capital for the firm for the year X2 and explain its value.Can a firm have a quick ratio less than 1.0 or net working capital that is less than 0 indefinitely? Explain.What is the objective of the firm? i.How does the objective of the firm relate to cash management models such as the Baumol Model or the Miller-Orr Model?
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