Grewers Automotive Products Ltd. has requested that you determine whether the company's ability to pay its current liabilities and long-term debt has improved or deteriorated during 2017. To answer this question, compute the following ratios for 2017 and 2016:
(a) Current ratio,
(b) Acid-test ratio,
(c) Debt ratio, and
(d) Times-interest-earned ratio.
Summarize the results of your analysis in a paragraph explaining what the results of the calculations mean.

Transcribed Image Text:

2017 $13,000 15,000 59,500 125,000 2016 Cash Short-term investments Net receivables Inventory Prepaid expenses Total assets Total current liabilities Total liabilities Income from operations Interest expense $25,500 65,500 135,000 5,500 260,000 130,000 143,000 82,500 21,000 9,000 275,000 108,500 137,000 99,000 22,500