Question

Just Dew It Corporation reports the following balance sheet information for 2017 and 2018 ook $ 73,750 $ 63,750 rences JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets Assets Liabilities and Owners' Equity 2017 2018 2017 2018 Current assets Current liabilities $ 10,500 $10.450 Cash Accounts payable 28,250 Accounts receivable 28,600 Notes payable 50,000 49,750 $ 123,750 $ 113,500 Inventory 64,300 63,500 Total $ 103,050 $ 102,550 $ 63,600 $ 64,600 Total Long-term debt Owners' equity Common stock and paid-in $ 80,000 $ 80,000 surplus Fixed assets Retained earnings 163,700 191,450 Net plant and $328,000 $ 347,000 $ 243,700 $ 271,450 Total equipment $ 431,050 $ 449,550 Total assets $ 431,050 Total liabilities and $ 449,550 owners' equity Based on the balance sheets given for Just Dew it, calculate the following financial ratios for the year 2017

Answer 1

Answer of Part 1-a:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $103,050 / $123,750
Current Ratio = 0.83

Answer of part 1-b:

Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Quick Ratio = ($103,050 - $64,300) /$123,750
Quick Ratio = $38,750 / $123,750
Quick ratio = 0.31

Answer of Part 1-C:

Cash Ratio = Cash / Current Liabilities
Cash ratio = $10,500 / $123,750
Cash Ratio = 0.08

Answer of Part 1-d:

NWC to Total Assets Ratio = (Current Assets – Current Liabilities) / Total Assets
NWC to Total Assets Ratio = ($103,050 - $123,750) / $431,050
NWC to total Assets Ratio = -$20,700 /$431,050
NWC to Total Assets Ratio = -0.05

Answer of Part 1-e:

Debt-Equity Ratio = Total Debt / Total Equity
Debt-Equity Ratio = ($123,750 + $63,600) / $243,700
Debt-Equity Ratio =$187,350 / $243,700
Debt Equity Ratio = 0.77

Equity Multiplier = 1 + Debt Equity Ratio
Equity Multiplier = 1 + 0.77
Equity Multiplier = 1.77

Answer of Part 1-f:

Total Debt Ratio = Total Debt / Total Assets
Total Debt Ratio = ($123,750 + $63,600) / $431,050
Total Debt Ratio = $187,350 / $431,050
Total Debt Ratio = 0.43

Long term Debt ratio = Long Term Debt / (Long term Debt + Total Equity)
Long term Debt Ratio = $63,600 / ($63,600 + $243,700)
Long term Debt Ratio = $63,600 / $307,300
Long Term Debt Ratio = 0.21

Answer of Part 2-a:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $102,550 / $113,500
Current Ratio = 0.90

Answer of part 2-b:

Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Quick Ratio = ($102,550 - $63,500) /$113,500
Quick Ratio = $39,050 / $113,500
Quick ratio = 0.34

Answer of Part 2-C:

Cash Ratio = Cash / Current Liabilities
Cash ratio = $10,450 / $113,500
Cash Ratio = 0.09

Answer of Part 2-d:

NWC to Total Assets Ratio = (Current Assets – Current Liabilities) / Total Assets
NWC to Total Assets Ratio = ($102,550 - $113,500) / $449,550
NWC to total Assets Ratio = -$10,950 /$449,550
NWC to Total Assets Ratio = -0.02

Answer of Part 2-e:

Debt-Equity Ratio = Total Debt / Total Equity
Debt-Equity Ratio = ($113,500 + $64,600) / $271,450
Debt-Equity Ratio =$178,100 / $271,450
Debt Equity Ratio = 0.66

Equity Multiplier = 1 + Debt Equity Ratio
Equity Multiplier = 1 + 0.66
Equity Multiplier = 1.66

Answer of Part 2-f:

Total Debt Ratio = Total Debt / Total Assets
Total Debt Ratio = ($113,500 + $64,600) / $449,550
Total Debt Ratio = $178,100 / $449,550
Total Debt Ratio = 0.40

Long term Debt ratio = Long Term Debt / (Long term Debt + Total Equity)
Long term Debt Ratio = $64,600 / ($64,600 + $271,450)
Long term Debt Ratio = $64,600 / $336,050
Long Term Debt Ratio = 0.19