Question

Just Dew It Corporation reports the following balance sheet information for 2017 and 2018.

Based on the balance sheets given for Just Dew It:

    

a.	Calculate the current ratio for each year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b.	Calculate the quick ratio for each year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c.	Calculate the cash ratio for each year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
d.	Calculate the NWC to total assets ratio for each year. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
e.	Calculate the debt-equity ratio and equity multiplier for each year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
f.	Calculate the total debt ratio and long-term debt ratio for each year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2017				2018					2017				2018
Current assets									Current liabilities
Cash	$	8,850			$	14,200			Accounts payable	$	37,500			$	46,600
Accounts receivable		15,750				23,000			Notes payable		11,850				19,400
Inventory		34,650				52,200
Total	$	59,250			$	89,400			Total	$	49,350			$	66,000
									Long-term debt	$	27,000			$	24,000
									Owners’ equity
									Common stock and paid-in surplus	$	45,000			$	45,000
									Retained earnings		178,650				265,000
Net plant and equipment	$	240,750			$	310,600			Total	$	223,650			$	310,000
Total assets	$	300,000			$	400,000			Total liabilities and owners’ equity	$	300,000			$	400,000

Answer 1

la) Current ratio 2017 Current assets / Current liabilities tio 2017 Current assets / Current liabilities Current ratio 2018 Current assets / Current liabilities 1.20 =59250/49350 1.35 =89400/66000 b) Quick ratio 2017 Quick ratio 2018 (Current assets - Inventory) / Current liabilities I Current assets - Inventory) / Current liabilities (Current assets – Inventory) / Current liabilities 0.50 =159250-34650)/49350 0.56 =(89400-52200)/66000 c) Cash ratio 2017 Cash ratio 2018 Cash / Current liabilities Cash / Current liabilities 0.18 =8850/49350 0.22 =14200/66000 d) NWC ratio 2017 NWC ratio 2018 NWC/ Total assets NWC/ Total assets 3.30% =(59250-49350)/300000 5.85% =(89400-66000)/400000

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