(L. OBJ. 4) Analyzing the ability to pay liabilities [15—20 min] Big Bend Picture Frame...

(L. OBJ. 4) Analyzing the ability to pay liabilities [15—20 min]

Big Bend Picture Frames has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2009. To answer this question, you gather the following data:

Requirement

1. Compute the following ratios for 2009 and 2008:

a. Current ratio

b. Add-test ratio

c. Debt ratio

d. Times-interest-earned ratio