Determine the current liabilities to net worth ratio for the construction company in Figure 6-1 and 6-2. What insight does this give you into the company€™s financial operations?
Figures 6-1 WEST MOUNTAIN CONSTRUCTION
BALANCE SHEET

Figures 6-2 WEST MOUNTAIN CONSTRUCTION
INCOME STATEMENT
REVENUES ................ 789,839
CONSTRUCTION COSTS
Materials ................. 92,214
Labor ................... 199,690
Subcontract ................ 401,948
Equipment ................. 20,833
Other ................... 1,352
Total Construction Costs .......... 716,037
EQUIPMENT COSTS
Rent and Lease Payments .......... 3,773
Depreciation ................ 6,673
Repairs and Maintenance ........... 2,734
Fuel and Lubrication ............ 7,289
Taxes, Licenses, and Insurance ....... 364
Equipment Costs Charged to Jobs ...... 20,833
Total Equipment Costs ........... 0
GROSS PROFIT .............. 73,802
OVERHEAD .............. 53,827
NET PROFIT FROM OPERATIONS .... 19,975
OTHER INCOME AND EXPENSE ...... 1,162
PROFIT BEFORE TAXES ......... 21,137
INCOME TAX .............. 3,921
PROFIT AFTER TAXES .......... 17,216

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Current Year Last Year ASSETS CURRENT ASSETS Cash Accounts Receivable-Trade Accounts Receivable-Retention Inventory Costs and Profits in Excess of Billings Notes Receivable Prepaid Expenses Other Current Assets 32,387 74,526 6,888 0 9,177 3,139 735 3.114 129,966 34,826 38,212 4,235 0 4,549 1,061 1119 84,002 Total Current Assets FIXED AND OTHER ASSETS Construction Equipment Trucks and Autos Office Equipment 39,229 8,981 8,057 56,267 39,229 8,981 8,057 56,267 39.889 16,378 50,462 150,842 Total Fixed Assets Less Acc. Depreciation Net Fixed Assets Other Assets 9,705 45,996 185,667 Total Assets LIABILITIES Current Liabilities 3,76835,772 2,022 5,791 2,254 2,405 308 5,330 57,418 48,916 106,334 38,682 Accounts Payable-Trade Accounts Payable-Retention Billings in Excess of Costs and Profits Notes Payable Accrued Payables Accrued Taxes Accrued Vacation Other Current Liabilities 3,536 1,424 4.022 4,574 2,718 606 6,605 Total Current Liabilities Long-Term Liabilities 61,544 123,943 Total Liabilities OWNER'S EQUITY Capital Stock Retained Earnings Current Period Net Income 10,000 51,724 0 10,000 34,508 0 44,508 150,842 Total Equity Total Liabilities and Equity 185,667