Question

Red River Services, Inc. Balance Sheet January 31, 2018 Assets Less: Liabilities Stockholders' Equity

Answer 1

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RED RIVER SERVICES INC. Balance Sheet January 31, 2018 Current Assets Cash Accounts Receivable Supplies Prepaid expenses Total Current Assets $17,300 $17,000 $3,200 $6,000 $43,500 $43,200 -$7,500 $35,700 $14,300 $93,500 Fixed Assets Equipment Less: Accumulated Deprecation Equipment (Net) Other Long term Asset Total Assets Liabilities and Stockholders Equity Current Liabilities Accounts Payable Current portion of Long term note payable Salary payable Unearned service revenue Total Current Liabilities Long term Liabilities Note payable Total Liabilities $12,800 $2,000 $3,400 $2,800 $21,000 $16, 2001 $37,200 Stockholders' Equity Retained Earnings Total Stockholders Equity Total Liabilities and Stockholders' Equity $4,100 $52,200 $56,300 $93,500

Net working capital Current Assets $43,500 - Current Liabilities = Networking capital - $21,000 = $22,500 Current Ratio Current Assets $43,500 Current Liabilities = 1 $21,000 Current Ratio 2.07 Debt Ratio Total Liabilities $37,200 N Total Assets $93,500 Debt Ratio 40% Red River's overall ability to pay current liabilities with current assets has improved during 2018 Red River's overall debt position has increased because debt ratio has increased Overall Red River's debt position is high because its debt ratio has increased form 25% to 40%