AST Company reports the following balance sheet information for 2009. Current As

Question

AST Company reports the following balance sheet information for 2009. Current Ass ets Fixed Assets Liabilities & Owners' Equity Current Liabilities Owners' Equity Required: Calculate the following financial ratios based on the balance sheet given for AST Company: Current Ratio Quick Ratio Cash Ratio Total Debt Ratio Debt-equity Ratio

Explanation / Answer

(a) current ratio = current assets/current liabilities => = 166689/219186 => = 0.76 (ANSWER) (b) QuIck ratio = quick current assets/current liabilities => = (cash + AR)/current liabilities => = (18288+44062)/219186 => = 0.284 (ANSWER) (c) Cash ratio = cash/current liabilities => = 18288/219186 => = 0.083 (ANSWER) (d) Total debt ratio = total debt/total assets => = (LT debt + ST debt)/TA => = (190000+69246)/748879 => = 0.346 (ANSWER) (e) Debt - equity ratio = LT debt/ owner's equity => = 190000/339693 => = 0.559 (ANSWER)

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