Styles QUESTION 3 Calculate the following ratios for Packing Corp for Year 2 onl

Question

Styles QUESTION 3 Calculate the following ratios for Packing Corp for Year 2 only (round to two decimals, e.g. 12.34, 34.56%); Packing Corp. Comparative Balance Sheet December 31. Years 1-2 Year 2 S19.00021.000 ear I s 19.000 Cash Temporary investments Accounts receivable Merchandise inventory Prepaid insurance Long-term investments Equipment (net) Land Goodwill Total Assets 41.000 51,000 8.000 19,000 131.000 23.000 54.000 S 404.000 348,000 24.000 37.000 60.000 5,000 51.000 131,000 23.000 54.000 Current liabilities Long-term liabilities Common shares 62.000 34,000 150,000 150 000 64.000 32.000 150,000

Explanation / Answer

1 Current Ratio = Current assets/Current liabilities =(19000+24000+37000+60000+5000)/62000 = 2.33871 2 Acid Test Ratio = Quick assets/Current Liabilities =(19000+24000+37000)/62000 = 1.290323 3 Debt ratio = Total Liabilites/Total average assets = 96000/((404000+348000)/2) = 0.26 4 Equity ratio = Total equity/Total average assets = 308000/((404000+348000)/2) = 0.82

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