QUESTION 3 Calculate the following ratios for Packing Corp for Year 2 only (roun

Question

QUESTION 3 Calculate the following ratios for Packing Corp for Year 2 only (round to two decimals, eg. 12.34, 34.56%): Packing Corp. Comparative Balance Sheet December 31, Years 1-2 Year 1 Year 2 S 19,000 21,000 Cash Temporary investments Accounts receivable Merchandise inventory Prepaid insurance Long-term investment:s Equipment (net) Land Goodwill Total Assets 41.000 51.000 8.000 19,000 131.000 23.000 54.000 404,000 S 348.000 24,900 37,000 60.000 5.000 51,000 131.000 23.000 54,000 Current liabilities Long-term liabilities Common shares Retained earnings Total Liabilities and Equity S 62,000 34,000 150.000 158,000 404,000 s 62.000 64,000 32,000 150,000 102.000 $348.000 $ English (US)

Explanation / Answer

1) current ratio = current assets/current liabilities

                          = (19,000+24,000+37,000+5,000)/62,000

                         =85,000/62,000

                         =1.37:1

2) acid test ratio =(cash +marketable securities +accounts receivables)/current liabilities

                          =(19,000+37,000)/62,000

                         =56,000/62,000

                         =0.90:1

3)debt ratio = total liabilities / total assets

                    =404,000/404.000

                    =1:1

4)equity ratio = total equity /total assets

                     = 404,000/404.000

                     =1:1                                      

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