A Corporation Reports the Following Year-End Balance Sheet Data

question 18

Short Answer

A corporation reports the following year-end balance sheet data. Calculate the following ratios:
(a) working capital
(b) acid-test ratio
(c) current ratio
(d) debt ratio
(e) equity ratio
(f) debt-to-equity ratio
Cash……………………….. $ 50,000 Current liabilities $ 64,000 Accounts receivable………. 35,000 Long-term liabilities………. 72,000
Inventory………………….. 60,000 Common stock…………….. 100,000
Equipment………………… 140,000 Retained earnings…………. 49,000 Total assets……………….. $285,000 Total liabilities and equity $285,000

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Definitions:

Compounded Semi-annually

Refers to the process where interest is calculated and added to the principal balance of an investment or loan twice a year.

Amortized

The process of spreading out a loan into a series of fixed payments over time.

Amortization

The method of distributing a loan across a sequence of consistent installments over a period.

Principal Balance

The remaining amount of money borrowed or invested, excluding any interest or fees.