Question
A company has asked you to determine whether the company ability to pay it's current liabilities and it's total liabilities improved or deteriorated in 2015.
A company has asked you to determine whether the company ability to pay it's current liabilities and it's total liabilities improved or deteriorated in 2015.
2015 2014
CASH $58,000. $75,000.
SHORT-TERM INVESTMENTS 31,000. 0
NET ACCOUNTS RECEIVABLE 110,000. 132,000.
MERCHANDISE INVENTORY 247,000. 297,000
TOTAL ASSETS 585,000. 535,000.
TOTAL CURRENT LIABILITIES 255,000. 222,000.
LONG-TERM NOTES PAYABLE 46,000. 48,000.
INCOME FROM OPERATIONS 180,000. 153,000.
INTEREST EXPENSE 52,000. 39,000.
Compute the following ratios for 2015 and 2014, and evaluate the company's ability to pay it's current and total liabilities. a. Current ratio b. Cash ratio c. Acid-test ratio d. Debt ratio e. Debt to equity ratio,
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