Calculate the current ratio for each year. (Do not round intermediate calculatio

Question

  

    

Calculate the current ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

    

   

Calculate the quick ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

    

  

Calculate the cash ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

    

  

Calculate the NWC to total assets ratio for each year. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

     

  

Calculate the debt–equity ratio and equity multiplier for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

  

    

Calculate the total debt ratio and long-term debt ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

  

Just Dew It Corporation reports the following balance sheet information for 2014 and 2015.

Explanation / Answer

a.

Current Ratio:

Current ratio = Current assets/Current liabilities

For 2014:

Current ratio = $ 63,200/ $ 54,240 = 1.1651917 or 1.17 times

For 2015:

Current ratio = $ 84,800/ $ 63,400 = 1.337539 or 1.34 times

b.

Quick Ratio:

Quick ratio = (Cash + Cash Equivalent + Short Term Investment + Current Receivables)/Current liabilities

For 2014:

Quick ratio = ($ 13,280 + $ 7,520)/ $ 54,240 = 0.383481 or 0.38 times

For 2015:

Quick ratio = ($ 14,600 + $ 19,200)/ $ 63,400 = 0.533123 or 0.53 times

c.

Cash ratio = (Cash + Cash Equivalent)/Current liabilities

For 2014:

Cash ratio = $ 13,280 / $ 54,240 = 0.244838 or 0.24 times

For 2015:

Cash ratio = $ 14,600/ $ 63,400 = 0.230284 or 0.23 times

d.

NWC (Net working capital) to total asset ratio = Net current assets/Total assets

For 2014:

NWC ratio = $ 63,200/$ 320,000 = 0.1975 or 19.75 %

For 2015:

NWC ratio = $ 84,800/$ 400,000 = 0.212 or 21.2 %

**** Answered for first four sub-parts.

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