The following accounting information exists for James and Charles companies at the end of 2012.

Required

a. Identify the current assets and current liabilities and compute the current ratio for each company.

b. Assuming that all assets and liabilities are listed here, compute the debt to assets ratios for each company.

c. Determine which company has the greater financial risk in both the short term and the long term.

Transcribed Image Text:

James Charles Cash $ 20,000 $ 30,000 Wages payable 25,000 25,000 Merchandise inventory 35,000 60,000 Building 80,000 80,000 Accounts receivable 30,000 35,000 Long-term notes payable 90,000 120,000 Land 45,000 50,000 Accounts payable 30,000 40,000 Sales revenue 220,000 270,000 Expenses 190,000 245,000