Use the Balance Sheets of Sando Shown Below to Calculate

question 65

Essay

Use the balance sheets of Sando shown below to calculate the following ratios for 2010 (round to the hundredths):
(a)Current ratio.
(b)Acid-test ratio.
(c)Debt ratio.
(d)Equity ratio.
$\begin{array}{c} \text { Sando Company}\\ \text { Balance Sheets}\\ \text { December 31,2010}\\\begin{array}{|l|r|}\hline \text { Cash } & \$ 43,000 \\\hline \text { Accounts receivable } & 38,000 \\\hline \text { Merchandise inventory } & 61,000 \\\hline \text { Prepaid insurance } & 6,000 \\\hline \text { Long-term investments } & 49,000 \\\hline \text { Plant assets (net) } & 218,000 \\\hline \text { Total assets } & \$ 415,000 \\\hline\\\hline \text { Liabilities and Equity: } & \\\hline \text { Current liabilities } & \$ 62,000 \\\hline \text { Long-term liabilities } & 45,000 \\\hline \text { Common stock } & 150,000 \\\hline \text { Retained earnings } & \underline{158,000} \\\hline \text { Total liabilities and equity } & \$ 415,000\\\hline\end{array}\end{array}$

---

Definitions:

Market Value

The current quoted price at which an asset or service can be bought or sold in a marketplace.

Debt Securities

Financial instruments representing money owed by the issuer to the holder, typically in the form of bonds, bills, or notes.

Held-To-Maturity

Financial assets with fixed maturities that a company has the positive intention and ability to hold until maturity.

Debt Instrument

A debt instrument is a document or contract representing a loan made by an investor to a borrower, specifying terms of repayment and interest.