At December 31 a company\'s records show the following information: Cash $10,000

Question

At December 31 a company's records show the following information:

                        Cash                                              $10,000

                        Accounts Receivable                    30,000

                        Inventory                                       30,000

                        .Prepaid Insurance                          6, 000

                        Long-term Assets                         120,000

                        Accounts Payable                           30,000

Notes Payable due in 10 months    25,000

                       Wages Payable                                 5,000

                        Long-term Liabilities                   100,000

Stockholders' (Owner's) Equity      36,000

                        Net Income                                    18,000

Calculate the current ratio

Calculate the Debt to Equity ratio

Calculate the Return on Assets

Calculate the Return on Equity

Explanation / Answer

current ratio              = current assets/current liabilities 76,000/60,000 1.27 Debt to Equity ratio = total liabilities/total Equity 160,000/36000 4.444444 Return on assets = net income/total assets 18000/196,000 9.18% Return on Equity   = net income/total Equity                                  = 18000/36000 50.00%

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