For the analysis of financial position, compute McDonough Products%u2019 (a) Cur
ID: 2374358 • Letter: F
Question
For the analysis of financial position, compute McDonough Products%u2019 (a) Current ratio and (b) Debt ratio. Compare these ratios with the industry averages. Is McDonough Products%u2019 financial position better or worse than the average for the industry? For the analysis of financial position, compute McDonough Products%u2019 (a) Current ratio and (b) Debt ratio. Compare these ratios with the industry averages. Is McDonough Products%u2019 financial position better or worse than the average for the industry?Explanation / Answer
Current ratio=Current assets/Current liabilities
Current assets=471200
Current liabilities=240560
Current ratio=471200/240560=1.96
B)Debt ratio=Total liabilities /total assets
=375720/620000
=0.606
Industry Average Current Ratio=1.53
Industry Average Debt ratio=0.68
SO industry has better position than average of industry.!!