The Hip Apple Pie Corporation has requested that you determine whether the company’s ability to pay its current liabilities and long-term debt has improved or deteriorated during 2020. To answer this question, compute the following ratios for 2020 and 2019: 

(a) Current ratio, 

(b) Acid-test ratio, 

(c) Debt ratio, 

(d) Debt/equity ratio, 

(e) Times-interest-earned ratio. Summarize the results of your analysis in a paragraph explaining what the results of the calculations mean.

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2020 2019 Cash $ 13,000 $ 25,500 Short-term investments 15,000 | Net receivables 59,500 65,500 Inventory 125,000 135,000 Prepaid expenses 9,000 5,500 Total assets 275,000 260,000 Total current liabilities 108,500 130,000 Total liabilities 137,000 143,000 Income from operations 99,000 82,500 Interest expense 22,500 21,000