Sprague Company has been operating for several years, and on December 31, 2020, presented the following balance

Question:

Sprague Company has been operating for several years, and on December 31, 2020, presented the following balance sheet.

The net income for 2020 was $25,000. Assume that total assets are the same in 2019 and 2020.

Instructions

Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company.

a. Current ratio.

b. Acid-test ratio.

c. Debt to assets ratio.

d. Return on assets.

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Step by Step Answer:

Related Book For book-img-for-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel

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Question Posted: Nov 28, 2019 06:23 AM

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Sprague Company has been operating for several years, and on December 31, 2020, presented the following balance

Question:

Sprague Company Balance Sheet December 31, 2020 Accounts payable Mortgage payable Common stock ($1 par) Retained earnings Cash Receivables $ 80,000 $ 40,000 75,000 140,000 Inventory Plant assets (net) 95,000 220,000 150,000 60,000 $430,000 $430,000

Step by Step Answer:

a Current ratio measures the shortterm ability of the company to mee...View the full answer

Intermediate Accounting

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