Answer:
1.
Current Ratio : Current Assets / Current Liability
Current ratio : 2.40 / 1
Acid Test Ratio : (Current Assets - Inventory) / Current Liability
Acid Test Ratio : 1.20 / 1
Inventory : $1,020,000
Creating equation 1:
1.20 = (Current assets - $1,020,000) / Current Liability
1.20 * Current Liability = Current assets - $1,020,000
Current Assets = 1.20 * Current Liability + $1,020,000
Creating equation 2:
2.40 = Current Assets / Current Liability
2.40 * Current Liability = Current Assets
Putting current assets into equation 1:
2.40* Current Liability = 1.20 * Current Liability + $1,020,000
Current Liability = $1,020,000 / 1.20 = $850,000
Solving for current assets:
Current Assets = 2.40 * $850,000 = $2,040,000
2.
Shareholder's Equity :
Debt to equity Ratio : Total debts / Shareholder's Equity
1.50 = Total Debts / Shareholder's Equity
1.5 * Shareholder's Equity = Total Debts
Using other information:
Shareholder's Equity + Total Debts = $3,000,000
Total Debts = $3,000,000 - Shareholder's Equity
Solving above :
1.5 * Shareholder's Equity = $3,000,000 - Shareholder's Equity
Shareholder's Equity = $1,200,000
3.
Long term Assets = Total Assets - current Assets
= $3,000,000 - $2,040,000 = $960,000
4.
Long term Liability:
Total Liability - Current Liability
= ($3,000,000 - $1,200,000) - $850,000
= $950,000
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Exercise 3-18 (Algo) Calculating ratios; solve for unknowns (LO3-8] The current asset section of the Excalibur...
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