Calculate the current ratio for each year. (Do not round intermediate calculatio
ID: 2810184 • Letter: C
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)
2014
Current assets = Cash + Accounts receivable + Inventory
= 13,280 + 7,520 + 42,400
= $63,200
Current liabilities = Accounts payable + Notes payable
= 40,000 + 14,240
= $54,240
Current ratio = Current assets/Current liabilities
= 63,200/54,240
= 1.17
2015
Current assets = Cash + Accounts receivable + Inventory
= 14,600 + 19,200 + 51,000
= $84,800
Current liabilities = Accounts payable + Notes payable
= 41,800 + 21,600
= $63,400
Current ratio = Current assets/Current liabilities
= 84,800/63,400
= 1.34
(b)
For 2014
Quick assets = Cash + Accounts receivable
= 13,280 + 7,520
= $20,800
Quick ratio = Quick assets/Current liabilities
= 20,800/54,240
= 0.38
For 2015
Quick assets = Cash + Accounts receivable
= 14,600 + 19,200
= $33,800
Quick ratio = Quick assets/Current liabilities
= 33,800/63,400
= 0.53
(c)
For 2014
Cash ratio = Cash/Current liabilities
= 13,280/54,240
= 0.24
For 2015
Cash ratio = Cash/Current liabilities
= 14,600/63,400
= 0.23
(d)
For 2014
NWC = Current assets - Current liabilities
= 63,200 - 54,240
= $8,960
NWC to total assets ratio = NWC/Total assets
= 8,960/320,000
= 0.028 times
For 2015
NWC = Current assets - Current liabilities
= 84,800 - 63,400
= $21,400
NWC to total assets ratio = NWC/Total assets
= 21,400/400,000
= 0.05 times
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