Western Wind Energy Corp. is in the business of develo
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Western Wind Energy Corp. is in the business of developing, owning, and operating wind- and solar energy-generating fa
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Western Wind Energy Corp. is in the business of developing, owning, and operating wind- and solar energy-generating facilities. The company is headquartered in Vancouver and has assets for both solar and wind energy in the United States, Canada, and in the Commonwealth of Puerto Rico. Selected information from Western Wind Energy's comparative balance sheet follows: Instructions (a) In Note 2(d), the company explains that cash consists of cash on deposit with banks and that it doesn't have any cash equivalents. What is a cash equivalent? Provide a possible reason as to why Western Wind Energy doesn't have cash equivalents. (b) In Note 3, the company explains that restricted cash includes cash balances held by the company for which the cash is restricted to meet specific operational, project, and debt service requirements, as required by financing arrangements. How much restricted cash in total did Western Wind Energy have at December 31, 2010 and 2011? Based on the information provided in the partial balance sheet, provide a possible explanation as to why total restricted cash decreased from 2010 to 2011. (c) Calculate (1) Working capital and (2) The current ratio for each year. Comment on your results. (d) Should the restricted cash be included in an acid-test ratio calculation? Why or why not?
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