The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc., as of January

The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc., as of January

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The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc., as of January
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The following are the current assets and current liabilities sections of the balance sheets of Freedom, Inc., as of January 31, 2017 and 2016 (in millions):
January 31, 2017January 31, 2016Current assets

Money
ps12

ps9

accounts receivable

5

8

inventories

7

11

Total current assets
ps24

ps28

current liabilities

Pay
ps6

ps6

Accounts payable

5

2

Other accrued liabilities

3

3

Total current liabilities
ps14

ps11

Required:a.¬†Calculate the working capital and the current ratio at each balance sheet date.b.¬†Evaluate the company’s liquidity at each balance sheet date.C. Assume the business operated at a loss for the year ending January 31, 2017. How might cash have increased during the year?
Changes in a company’s cash position and its profitability are not directly related under the accrual (or accrual) basis of accounting.
Changes in a company’s cash position and its profitability are not directly related under the cash basis of accounting.

Expert Answer:

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a Working capital is calculated by subtracting current liabilities from current assets January 31 20
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