Refer to the Hajjar's Data Set.
a. Compute the debt ratio at December 31, 2012.
b. Is Hajjar's ability to pay its liabilities strong or weak? Explain your reasoning.
Hajjar's Data Set
Hajjar's
Income Statement
For the Year Ended December 31, 2012
Net sales ...................................................................................................... $42,522,500
Cost of goods sold........................................................................................ 29,900,000
Interest expense............................................................................................ 405,820
All other expenses ........................................................................................ 9,665,300
income.......................................................................................................... $2,551,380

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Hajjar's Balance Sheet December 31, 2012 and 2011 2012 $ 1,300,000 $ 900,000 Total current liabilities 2011 2012 2011 4,800,000 3,250,000 4,529,000 4,760,000 Cash Short-term investments..250,000 275,000 Long-term liabilities Accounts receivable Inventory....4,870,000 4,330,000 Other current00 Total current assets All other Total assets 200,000 219,400 Total liabilities 9,329,000 8,01 ,520,000 2,500,000 arnings.7.4310006,175,000 10,951,000 8,675,000 $20,280,000 $16,685,000 Total liabilities and equity. $20,280,000 $16,685,000 assets..._ 600,000 455,600 Common 7,220,000 6,180,000 Retained earning r assets13,060,000 10,505,000 Total equity