Diane corporation is preparing its 2012 balance sheet. the company records show the following selected amounts at the end of the accounting period, december 31, 2012.
total assets $530,000
total noncurrent assets $362,000
liabilities:
notes payable (8%, due in 5 years) $15,000
accounts payable $56,000
income taxes payable $14,000
liability for withholding taxes $3,000
rent revenue collected in advance $7,000
bonds payable (due in 15 years) $90,000
wages payable $7,000
property taxes payable $3,000
note payable (10%, due in 6 months) $12,000
interest payable $400
common stock $100,000
required:
1. compute (a) working capital and (b) the quick ratio (quick assets are $70,000). why is working capital important to management? how do financial analysts use the quick ratio?
2. would your computations be different if the company reported $250,000 worth of contingent liabilities in the notes to the statements? explain.