Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 58

Calculating and Evaluating the Current Ratio
Volcom, Inc. , is a clothing designer, marketer, and distributor, known widely for its motto of "youth against establishment." The company reported the following in recent balance sheets (amounts in thousands).

Required:
1. Calculate the current ratio at March 31, 2011 and December 31, 2010.
2. Did the company's current ratio increase or decrease What does this imply about the company's ability to pay its current liabilities as they come due
3. What would Volcom's current ratio have been on March 31, 2011, if the company were to have paid down $10,000 of its Accounts Payable Does paying down Accounts Payable in this case increase or decrease the current ratio
4. Are the company's total assets financed primarily by liabilities or stockholders' equity at March 31, 2011