Question
A company has the following balance sheet items: Cash $10,000, Accounts Receivable $15,000, Inventory $20,000, Accounts Payable $8,000, Short-term Debt $5,000, Long-term Debt $30,000, and
A company has the following balance sheet items: Cash $10,000, Accounts Receivable $15,000, Inventory $20,000, Accounts Payable $8,000, Short-term Debt $5,000, Long-term Debt $30,000, and Equity $22,000. Calculate the company’s current ratio, quick ratio, and debt to equity ratio.
Requirements:
- Calculate the current ratio.
- Compute the quick ratio.
- Determine the debt to equity ratio.
- Analyze the company’s liquidity position.
- Discuss the implications for the company's financial health.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
