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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