Question

Autumn Frames has asked you to determine whether the companys ability to pay current liabilities and total liabilities impro
- X Data Table 2016 2017 61,500 $ 49,500 $ Cash 26,000 S 0 $ Short-term investments 127,300 $ 126,560 $ Net receivables 284,9
- X Requirements a. Current ratio b. Acid-test ratio c. Debt ratio d. Times-interest-earned ratio
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Answer #1
Calculations
Current Assets / Current liability = Current ratio Current assets
2017 450360 / 278000 = 1.62 61500+26000+126560+236300
2016 461760 / 208000 = 2.22 49500+127300+284960
(Total Current asset-inventory) / Current liability = Acid Test Ratio
2017 214060 / 278000 = 0.77
2016 176800 / 208000 = 0.85
Total debt / Total assets = Debt ratio Calculation of total debt
2017 298920 564000 0.53 278000+20920
2016 238140 486000 0.49 208000+30140
Earning before Interest and tax / Interest expense = Times earned interest ratio
2017 166110 / 49000 = 3.39
2016 169260 / 42000 = 4.03
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