Acc350 Managerial Accounting

ED-21 Analyzing the ability to pay liabilities

Large Land Photo Shop has asked you to determine whether the companys ability to pay current liabilities and total liabilities improved or deteriorated during 2015. Analyzing a company for its investment potential

To answer this question, you gather the following data:

20152014

Cash58,00057,000

Short-term investments31,000

Net receivables110,000132,000

Inventory247,000297,000

Total assets585,000535,000

Total current liabilities255,000222,000

Long-term note payable46,00048,000

Income from operations180,000153,000

Interest expense52,00039,000

1. Compute the following ratios for 2015 and 2014:

a. Current ratio

b. Acid-test ratio

c. Debt ratio

d. Debt to equity ratio

PLEASE EXPLAIN YOUR ANSWER STEP BY STEP AND I'LL REWARD FULL POINTS