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Chico Portat My Accoux Lectures - 198-ABUS * Assignments - 198-A3 X ® Microsoft Word - Hor X id-4000605-dt-content-rid-651448
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Answer #1

rate positively ..

Given that-
Current ratio 40000 Current liabilities 60000
Non current ratio 240000 Non current liabilties 50000
Total liabilities 110000
Owner's equity 170000
Total asset 280000 Total liabilities + Equity 280000
ans 1 Working capital = Current asset - current liabilities
=40000-60000
-20000
Working capital is required to meet the short term business need.
ans 2 Current ratio = Current asset / Current liabilities
=40000/60000
          0.67
Current ratio is expression of working capital in ratio form.
ans 3 Debt to asset ratio
Debt = 110000
Asset = 280000
Debt to asset ratio = 39.29%
this means 39.29% of the asset is financed by the debt.
ans 4 Equity to asset ratio
equity = 170000
Asset = 280000
Equity to asset ratio = 60.71%
this means 60.71% of the asset is financed by the equity.
ans 5 Working capital or current ratio is not good for the company .
Firm does not have sufficient liquidity to pay its short term liability.
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