Question

Bethesda Mining Company reports the following balance sheet Information for 2018 and 2019. 2018 2019 Assets Current assets Cash Accounts receivable BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 Llabilities and Owners' Equity Current liabilities $ 31,982 $ 41,399 Accounts payable 58,781 79,139 Notes payable $ 193,422 $ 201,111 88,520 140,088 Inventory 131,971 198,632 Total $ 281,942 $ 341,199 Total $222,734 $319,170 $244.000 $ 180,750 Long-term debt Owners' equity Common stock and pald-In surplus Accumulated retained earnings $ 211,000 $ 211,000 143,239 175,549 Fixed assets Net plant and equipment $657,447 $ 589,328 Total $354,239 $386,549 Total assets $ 880.181 $908,498 Total liabilities and owners equity $ 880,181 $908,498

Answer 1

c). Cash ratio = cash and cash equivalent/current assets

So, cash ratio for 2018 = 31982/281942 = 0.1134

cash ratio for 2019 = 41399/341199 = 0.1213

d). Debt = long term debt + current liabilities

Total debt 2018 = 281942+244000 = 525942

Total debt 2019 = 341199+180750 = 521949

equity for 2018 = 354239

equity for 2019 = 386549

Debt equity ratio = total debt/equity

equity multiplier = Total assets/equity

debt-equity 2018 = 525942/354239 = 1.48

equity multiplier 2018 = 880181/354239 = 2.48

debt-equity 2019 = 521949/386549 = 1.35

equity multiplier 2019 = 908489/386549 = 2.35

e) total debt ratio = total debt/total assets

total debt ratio 2018 = 525942/880181 = 0.60

total debt ratio 2019 = 521949/908489 = 0.57