Another company in the news is Norfolk Southern railroad. This firm recently had one of its trains derail in Ohio causing a huge amount of environmental clean-up. Hypothetically, assume that Norfolk Southern must sell its long-term investments to pay for the clean-up. The current ratio and debt to equity ratio before the sale at 12/31/2022 are Current ratio at 12/31/2022=.758 Debt to Equity ratio at 12/31/2022=2.05 Hypothetically assume that the investments reported at $3,694 are sold at a gain of $2000 on January 1,2023 ? This means that the cash collected was $5,694. What are the new ratios immediately after this hypothetical sale? Norfolk Southern Corporation and Subsidiaries Consolidated Balance Sheets AtDecember31,(5inmillions)202212021 Assets Current assets Cash and cash cquivalents Accounts receivable - net Materials and supplies Other current assets Total current assets Investments Properties less accumulated depreciation of $12,592 and $12,031, respectively Other assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Short-term debe Income and other taxes Other current liabilities Current maturities of long-term debt Total current liabilities Long-term debt Other liabilities Deferred income taxes Total liabilities \begin{tabular}{rr} 14,479 & 13,287 \\ 1,759 & 1,879 \\ 7,265 & 7,165 \\ \hline 26,152 & 24,852 \end{tabular} Stockholders' equity: Common Stock 51.00 per share par value, 1,350 000, 000 shares authorized; outstanding 228,076,415 and 240,162,790 shares, respectively, net of treasury shares Additional paid-in capital Accumulated other comprehensive loss Retained income Total stockholders' equity Total liahilities and stockholder'' equity 1) The current ratio and the debt equity ratio increase. 2) The current ratio increases to 2.9 and the debt equity ratio decreases to 1.78. 3) The current ratio increases to 1.51 and the debt equity ratio increases to 2.21 Another company in the news is Norfolk Southern railroad. This firm recently had one of its trains derail in Ohio causing a huge amount of environmental clean-up. Hypothetically, assume that Norfolk Southern must sell its long-term investments to pay for the clean-up. The current ratio and debt to equity ratio before the sale at 12/31/2022 are Current ratio at 12/31/2022=.758 Debt to Equity ratio at 12/31/2022=2.05 Hypothetically assume that the investments reported at $3,694 are sold at a gain of $2000 on January 1,2023 ? This means that the cash collected was $5,694. What are the new ratios immediately after this hypothetical sale? Norfolk Southern Corporation and Subsidiaries Consolidated Balance Sheets AtDecember31,(5inmillions)202212021 Assets Current assets Cash and cash cquivalents Accounts receivable - net Materials and supplies Other current assets Total current assets Investments Properties less accumulated depreciation of $12,592 and $12,031, respectively Other assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Short-term debe Income and other taxes Other current liabilities Current maturities of long-term debt Total current liabilities Long-term debt Other liabilities Deferred income taxes Total liabilities \begin{tabular}{rr} 14,479 & 13,287 \\ 1,759 & 1,879 \\ 7,265 & 7,165 \\ \hline 26,152 & 24,852 \end{tabular} Stockholders' equity: Common Stock 51.00 per share par value, 1,350 000, 000 shares authorized; outstanding 228,076,415 and 240,162,790 shares, respectively, net of treasury shares Additional paid-in capital Accumulated other comprehensive loss Retained income Total stockholders' equity Total liahilities and stockholder'' equity 1) The current ratio and the debt equity ratio increase. 2) The current ratio increases to 2.9 and the debt equity ratio decreases to 1.78. 3) The current ratio increases to 1.51 and the debt equity ratio increases to 2.21
