Referring to information in Exercise 4.1, calculate working capital and describe what it means.
Exercise 4.1
A restaurant reported the following current assets: cash $12,000, credit card receivables $1,800, accounts receivable $180, food inventory $4,400, and prepaid expenses, $1,120. Current liabilities total $7,800. Answer the following:
a. Calculate the current ratio.
b. Calculate the quick ratio (acid test ratio).
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