Cash Accounts receivable Inventories Prepaid insurance Equipment Accumulated dep

Question

Cash Accounts receivable Inventories Prepaid insurance Equipment Accumulated depreciation-equipment Patent, net Accounts payable Interest payable Note payable (due in 10, equal annual installments) Common stock Retained earnings Totals $ 61,000 45,000 51,000 21,000 120,000 $ 40,000 46,000 15,000 5,000 120,000 76,000 88,000 $344,000 $344,000 a. Calculate the current ratio b. Calculate the acid-test ratio. c. Calculate the debt to equity ratio. Current Ratio Numerator Current Assets Denominator Current Liabilities Acid-Test Ratio Numerator Current Assets Denominator Current Liabilities Debt to Equity Ratio Numerator Current Assets Shareholders' Fitv

Explanation / Answer

Calculate following :

Current Ratio Numertor Current assets = 178000 =
8.90 Denominator Current Liabilities = 20000 = Acid test ratio Numerator Current assets-inventory-prepaid exp = 106000 = 5.30 Denominator Current liabilities = 20000 = Debt to equity ratio Numerator Total debt = 140000 = 0.85 Denominator Shareholder's equity = 164000 =

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