Homework Answers
Answer:
| a1. current assets = Cash + Merchandise inventory + Accounts receivable |
| Aspen = 30000+ 65000+ 35000= $130,000 |
| Willow = 25000 + 35000 + 40000 = $100,000 |
| Current liabilities = Wages payable + accounts payable |
| Aspen = 30000+ 55000 = $85,000 |
| Willow = 25,000 + 50000 = $75000 |
| a2. Current ratio = Current assets /current liability |
| Aspen = 130000/ 85000 = 1.53 times |
| Willow =100000 / 75000 = 1.33 times |
| b.debt-to-assets ratios = debt / assets = (Long-term notes payable + Current liabilities) / (current assets + building + land) |
| Aspen = (145,000+85,000) / (130000+95000+60000) = 0.81 times |
| Willow = (110,000+75,000) / (110000+95000+55000) = 0.71 times |
| c1. greater financial risk in the short term - Aspen |
| (Current Ratio is more than ) |
| c2. greater financial risk in the long term = Aspen |
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