Question

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019 Assets Current assets Cash Inventory BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Liabilities and Owners' Equity Current liabilities $ 21182 $ 24.141 Accounts payable $ 180,108 $ 190,767 51,036 59.935 Notes payable 83,179 98,175 120.589 142,718 Total $ 263 287 $ 288,942 $ 192,807 $ 226,794 Long-term debt $305,000 $ 340,000 Owners' equity Common stock and paid in $ 165,000 $ 178,000 surplus Accumulated retained earnings 235,445 283,578 Total Fixed assets Net plant and equipment $775,925 $ 863,726 Total $400,445 $ 461,578 Total assets $968,732 $1,090,520 Total liabilities and owners equity $ 968,732 $1,090,520

Answer 1

Answer -

a.	2018 Current ratio	0.7323	times
	2019 Current ratio	0.7849	times
b.	2018 Quick ratio	0.2743	times
	2019 Quick ratio	0.2910	times
c.	2018 Cash ratio	0.0805	times
	2019 Cash ratio	0.0835	times
d.	2018 Debt-equity ratio	1.4191	times
	2019 Debt-equity ratio	1.3626	times
	2018 Equity multiplier	2.4191	times
	2019 Equity multiplier	2.3626	times
e.	2018 Total debt ratio	0.5866	times
	2019 Total debt ratio	0.5767	times

Calculation:

a. Current ratio:

2018:

Current ratio = Current assets / Current liabilities

Current ratio = $192807 / $263287

Current ratio = 0.7323 times

2019:

Current ratio = Current assets / Current liabilities

Current ratio = $226794 / $288942

Current ratio = 0.7849 times

b. Quick ratio:

2018:

Quick ratio = (Current assets - Inventory) / Current liabilities

Quick ratio = ($192807 - $120589) / $263287

Quick ratio = 0.2743 times

2019:

Quick ratio = (Current assets - Inventory) / Current liabilities

Quick ratio = ($226794 - $) / $288942

Quick ratio = 0.2910 times

c. Cash ratio:

2018:

Cash ratio = Cash / Current liabilities

Cash ratio = $21182 / $263287

Cash ratio = 0.0805 times

2019:

Cash ratio = Cash / Current liabilities

Cash ratio = $24141 / $288942

Cash ratio = 0.0835 times

d. Debt-equity ratio and equity multiplier:

2018:

1. Debt-equity ratio = Total liabilities / Total equity

Debt-equity ratio = (Total current liabilities + Long-term debt) / (Common stock and paid in surplus + Accumulated retained earnings)

Debt-equity ratio = ($263287 + $305000) / ($165000 + $235445)

Debt-equity ratio = 1.4191 times

2. Equity multiplier = Total assets / Total equity

Equity multiplier = $968732 / $400445

Equity multiplier = 2.4191 times

2019:

1. Debt-equity ratio = Total liabilities / Total equity

Debt-equity ratio = (Total current liabilities + Long-term debt) / (Common stock and paid in surplus + Accumulated retained earnings)

Debt-equity ratio = ($288942 + $340000) / ($178000 + $283578)

Debt-equity ratio = 1.3626 times

2. Equity multiplier = Total assets / Total equity

Equity multiplier = $1090520 / $461578

Equity multiplier = 2.3626 times

e. Total debt ratio:

2018:

Total debt ratio = Total liabilities / Total assets

Total debt ratio = (Total current liabilities + Long-term debt) / Total assets

Total debt ratio = ($263287 + $305000) / $968732

Total debt ratio = 0.5866 times

2019:

Total debt ratio = Total liabilities / Total assets

Total debt ratio = (Total current liabilities + Long-term debt) / Total assets

Total debt ratio = ($288942 + $340000) / $1090520

Total debt ratio = 0.5767 times