Question

176 Chapter 8 . Comparison Reports and Financial Analysis Practice Exercises Calculate the following ratios from the information sheet and balance sheet that are attached. Flagstaff Hotel Balance Sheet June 30, 2008 0001 $75 40 90 $205 $ 60 40 28 $125 ASSETS Current Cash Accounts Receivable Inventories Total Current Assets Long Term Property Plant Equipment Less Depreciation Total Long-Term Assets Total Assets $125 200 150 50 $525 S730 LIABILITIES Current Accounts Payable Wages Payable Taxes Payable Total Current Liabilities Long Term Bank Loans Line of Credit Lease Obligations Other Long-Term Obligations Total Long-Term Liabilities Total Liabilities OWNER EQUITY Paid In Capital Capital Stock Retained Earnings Total Owner Equity Total Liabilities and Owner Equity $150 50 25 g $225 $350 $200 100 $380 5730 Total Assets $730 Flagstaff Hotel-600 Rooms Operating Information June 30, 2008 1. Total rooms 18,000 - 600 x 30 days in June 2. Total out of order and complimentary rooms - 75 3. Total rooms sold in June - 15,300 4. Total guests - 18,360 5. Total room revenue - $1,185,000 6. Total restaurant customers - 11,000 7. Total restaurant revenue - $125,000 8. Total food cost-$35,500 9. Total hotel profit (net profit) - $550,000 10. Number common shares outstanding - 1,000,000 11. Stock price $12.00 12. Total hotel revenue = $1,575,000 Use the above information to solve the following Activity Ratios, Operating Ratios, Profitability Ratios, Liquidity Ratios, and Solvency Ratios.

Answer 1

1 . Current ratio can be calculated using the formula=[current assets/current liabilities]

=[205/125]= 1.64

Correct answer will be option ( C) 1.64