Use the Balance Sheets of Glover Shown Below to Calculate

question 202

Essay

Use the balance sheets of Glover shown below to calculate the following ratios for 2018 (round to the hundredths):
(a) Current ratio.
(b) Acid-test ratio.
(c) Debt ratio.
(d) Equity ratio.
$\begin{array}{c} \text {Glover Company}\\ \text {Balance Sheets}\\ \text {December 31, 2018 and 2017}\\\begin{array}{|l|l|l|}\hline & \underline{2018} & \underline{2017} \\\hline \text { Assets: } & & \\\hline \text { Cash } & \$ 43,000 & \$ 22,000 \\\hline\end{array}\end{array}$

$$\begin{array} {| l | l | l |} \hline\text { Accounts receivable } & 38,000 & 42,000 \\\hline \text { Merchandise inventory } & 61,000 & 52,000 \\\hline \text { Prepaid insurance } & 6,000 & 9,000 \\\hline \text { Long-term investments } & 49,000 & 20,000 \\\hline \text { Plant assets (net) } & 218,000 & 218,000 \\\hline \text { Total assets } & \$ 415,000 & \$ 363,000 \\& & \\ \hline\\\hline \text { Current liabilities } & & \\\hline \text { Long-term liabilities } & \$ 62,000 & \$ 75,000 \\\hline \text { Common stock } & 45,000 & 36,000 \\\hline \text { Retained earnings } & 150,000 & 150,000 \\\hline \text { Total liabilities and equity } & 158,000 & 102,000 \\\hline\end{array}$$

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Definitions:

Training

The process of enhancing the skills, capabilities, and knowledge of employees for the purpose of improving their job performance.

Managers

Individuals responsible for controlling or administering an organization or group of staff.

Marginal Revenue Product

The extra revenue generated by employing one more unit of a factor, such as labor or capital, holding other factors constant.

Variable Factor

An input whose quantity can change depending on the level of production or the scale of operations in the short run.