Question

Chapter 17-4

4o 4 (0 complete HW Score: 0%, 0 of 36 pts Score: 0 of 10 pts E17-19 (similar to) Question Help Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilites and total liabilities improved or deteriorated during 2018 To answer this question, you gather the following data (Click the icon to view the data) Read the couremen's a. Compute the current ratios for 2018 and 2017 Begin by selecting the formula to compute the current ratio Current ratio

Answer 1

2018

a) current ratio = current assets / current liabilities

= 467,000 / 285,000

= 1.64

b) cash ratio = cash / current liabilities

= 60,000 / 285,000

= 0.21

c) acid test ratio = current assets - inventory / current liabilities

= 467,000 - 227,000 / 285,000

= 0.84

d) Debt ratio = total liabilities / total assets

= 333,000 / 555,000

= 0.6

e) debt to equity ratio = total liabilities / total equity

= 333,000 / 222,000

= 1.5

total equity = total assets - total liabilities

= 555,000 - 333,000

= 222,000

2017

a) current ratio = current assets / current liabilities

= 450,000 / 110,000

= 4.09

b) cash ratio = cash / current liabilities

= 55,000 / 110,000

= 0.5

c) acid test ratio = current assets - inventory / current liabilities

= 450,000 - 267,000 / 110,000

= 1.66

d) Debt ratio = total liabilities / total assets

= 162,000 / 520,000

= 0.31

e) debt to equity ratio = total liabilities / total equity

= 162,000 / 358,000

= 0.45

total equity = total assets - total liabilities

= 520,000 - 162,000

= 358,000