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2018 2017 Cash Short-term Investments Net Accounts Receivables Merchandise Inventory Total Assets 60,000 $ 53,000 30,000...

Question

2018 2017 Cash Short-term Investments Net Accounts Receivables Merchandise Inventory Total Assets 60,000 $ 53,000 30,000...

2018 2017 Cash Short-term Investments Net Accounts Receivables Merchandise Inventory Total Assets 60,000 $ 53,000 30,000 0 14
Compute the following ratios for 2018 and 2017, and evaluate the companys ability to pay its current liabilities and total l
2018 2017 Cash Short-term Investments Net Accounts Receivables Merchandise Inventory Total Assets 60,000 $ 53,000 30,000 0 146,000 132,000 277,000 252,000 495,000 535,000 265,000 202,000 44,000 56,000 170,000 178,000 48,000 44,000 Total Current Liabilities Long-term Note Payable Income from Operations Interest Expense
Compute the following ratios for 2018 and 2017, and evaluate the company's ability to pay its current liabilities and total liabilities: a. Current ratio d. Debt ratio b. Cash ratio e. Debt to equity ratio c. Acid-test ratio

Answers

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Statement of Financial Position
Assets 2018 2017
Cash      60,000.00        53,000.00
Short term investments      30,000.00                       -  
Net Accounts Receivable    146,000.00      132,000.00
Merchandise Inventory    277,000.00      252,000.00
Total Current Assets    513,000.00      437,000.00
Total Assets    495,000.00      535,000.00
Liabilities & Stockholders' Equity
Liabilities 2018 2017
Current Liabilities    265,000.00      202,000.00
Long Term Liabilities      44,000.00        56,000.00
Total Liabilities    309,000.00      258,000.00
Stockholders' Equity    186,000.00      277,000.00 This is total assets less total liabilities
Total Liabilities & Stockholders' Equity    495,000.00      535,000.00
Quick Assets 2018 2017
Cash      60,000.00        53,000.00
Short term investments      30,000.00                       -  
Accounts Receivable    146,000.00      132,000.00
Total Quick Assets    236,000.00      185,000.00
Cash Assets 2018 2017
Cash      60,000.00        53,000.00
Short term investments      30,000.00                       -  
Total Cash Assets      90,000.00        53,000.00
Final Answer 2018 2017 Comments
Current Ratio
Current Assets/Current Liabilities 1.94 2.16 Current Ratio has decreased. It means company's ability to pay off its current liabilities has decreased.
Cash Ratio
Cash Assets/Current Liabilities 0.34 0.26 Cash Ratio has increased. It means company's ability to maintain cash assets to pay off its current liabilities has increased.
Quick Ratio
Quick Assets/Current Liabilities 0.89 0.92 Quick Ratio has decreased. It means company's ability to pay off its current liabilities has decreased.
Debt Ratio
Total Liabilities/ Total Assets 0.62 0.48 Debt Ratio has increased. It means company's assets has reduced in proportion to its debt which may hamper its ability to pay off its total liabilities in future.
Debt to Equity Ratio
Total Liabilities/ Total Equity 1.66 0.93 Debt to equity ratio has increased. It means company's equity has reduced in proportion to its debt which may hamper its ability to pay off its total liabilities in future.


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