Use the following to answer questions 2-5: Shown below are selected data from th

ID: 2380943 • Letter: U

Question

Use the following to answer questions 2-5:

Shown below are selected data from the balance sheet of HiTech, a small electronics store (dollar amounts are in thousands):

Cash....................................................................................

$25

Accounts receivable.............................................................

Inventory.............................................................................

Total assets..........................................................................

400

Current liabilities...................................................................

100

Non current liabilities............................................................

240

2. Refer to the above data. The quick ratio is:

3. Refer to the above data. The current ratio is:

4. Refer to the above data. Working capital amounts to:

5. Refer to the above data. Hi-Tech's debt ratio is:

A) $ 60,000. B) $225,000. C) $120,000. D) $ 90,000.

1. D($90,000)

Explanation:

Current liability = $150,000/2.5 = $60,000

Working capital = Current assets - Current liability = $150,000 - $60,000 = $90,000

2. B (.7:1)

Explanation:

Quick ratio = Quick assets/ Current liability = ($25,000 + $45,000)/$100,000 = $70,000/$100,000 = 0.7:1

3. B(1.5:1)

Explanation:

Current ratio = Current assets/ Current liability = ($25,000 + $45,000 + $80,000) / $100,000 = $150,000/ $100,000 =1.5:1

4. C($50,000)

Explanation:

Working capital = Current assets - current liability = $150,000 - $100,000 = $50,000

5. A(85%)

Explanation:

Debt ratio = Total liabilities/Total assets *100 =( $100,000 + $240,000)/$400,000 *100 = $340,000/$400,000 *100 = 85%

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