Debt Management and Short-Term Liquidity Ratios}

Magellan Company is an international travel agency providing travel planning services to customers in over 20 countries. Recently, the travel industry has been experiencing volatility as a result of increases in oil prices. Magellan's investors have been following its financial information closely to determine its ability to continue as a going concern. Its investors have used the following information to determine financial ratios:

\section*{Required:}
Between 2017 and 2018, indicate whether Magellan's debt-to-equity ratio increased or decreased. Also, indicate whether Magellan's current ratio increased or decreased. Interpret these ratios.
\section*{Brief Exercise

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2018 2017 Current assets $5,000 $3,600 Long-term assets 6,000 3,900 Current liabilities 1,500 2,200 Long-term liabilities 5,000 0 Shareholders' equity 3,900 3,900