Question

Bethesda Mining Company reports the following balance sheet information for 2015 and 2016.

BETHESDA MINING COMPANY Balance Sheets as of December 31, 2015 and 2016
	2015				2016					2015				2016
Assets									Liabilities and Owners’ Equity
Current assets									Current liabilities
Cash	$	70,322			$	88,509			Accounts payable	$	185,922			$	193,611
Accounts receivable		66,281				86,639			Notes payable		81,020				132,588
Inventory		114,322				178,920			Total	$	266,942			$	326,199
Total	$	250,925			$	354,068			Long-term debt	$	229,000			$	165,750
									Owners’ equity
									Common stock and paid-in surplus	$	226,000			$	226,000
Fixed assets									Accumulated retained earnings		187,930				226,197
Net plant and equipment	$	658,947			$	590,078			Total	$	413,930			$	452,197
Total assets	$	909,872			$	944,146			Total liabilities and owners’ equity	$	909,872			$	944,146

Based on the balance sheets given for Bethesda Mining, calculate the following financial ratios for each year:

a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Current ratio
2015		times
2016		times

b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Quick ratio
2015		times
2016		times

c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Cash ratio
2015		times
2016		times

d. Debt−equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Debt−equity ratio				Equity multiplier
2015			times				times
2016			times				times

e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Total debt ratio
2015			times
2016			times

Answer 1

Current Assets Current Ratio Current Liabilities Current Ratio (2015)-250,925 / 266,942 -0.94 Current Ratio (2016)-354,068 / 326,199 1.08 Current Assets - Inventory - Prepaid Expenses Current Liabilities Quick Ratio - Quick Ratio (2015)-(70,322 66,281) / 266,942 0.51 Quick Ratio (2016)- (88,509 + 86,639) / 326,199 0.54 Cash & cash Equivalents Current Liabilities Cash Ratio - Cash Ratio (2015) 70,322 / 266,942 0.26 Cash Ratio (2016) = 88.5091 326.199 = 0.27 Debt to EquityTotal Liabilities Shareholders'equity Debt-to-Equity Ratio (2015) = (266.942-229.000)/ 413.930 = 1.198 or 1.20 Debt-to-Equity Ratio (2015)- (165,750 + 326,199)/452,197-1.0879 or 1.09 Total Assets Equity Multiplier - Shareholders' equity Equity Multiplier (2015) = 909.872.413.930 = 2.198 Equity Multiplier (2016) -944,146 / 452,197- 2.0879 Total Liabilities Debt Ratio Total Assets Debt Ratio (2015) (266,942 229,000) /909.872- 0.545 Debt Ratio (2016)- (165,750 + 326,199) /944,146 0.521