Cash. . . . . . . . . . . . . . . . . . .

$48,500

Accounts payable. . . . . . . .

$141,000

Short-term investments. . . . . .

20,500

Accrued liabilities. . . . . . . . .

51,500

Accounts receivable, net. . . . .

99,500

Long-term notes payable. . .

145,500

Inventories. . . . . . . . . . . . . . .

274,000

Other long-term liabilities. . .

77,000

Prepaid expenses. . . . . . . . . .

16,000

Net income. . . . . . . . . . . . .

106,000

Total assets. . . . . . . . . . . . . .

933,000

Number of common

Short-term notes payable. . . . .

70,500

shares outstanding. . . . .

19,500

1.	Compute Greatland'sGreatland's current ratio, debt ratio, and earnings per share. Use dollar and share amounts in thousands except for EPS.
2.	Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
	a.	Borrowed $ 25 comma 500$25,500 on a long-term note payable
	b.	Issued 10 comma 00010,000 common shares, receiving cash of $ 105 comma 000$105,000
	c.	Paid short-term notes payable, $ 51 comma 000$51,000
	d.	Purchased merchandise of $ 47 comma 500$47,500 on account, debiting Inventory
	e.	Received cash on account, $ 5 comma 700

Requirement 1. Compute Greatland's current ratio, debt ratio, and earnings per share. Use dollar and share amounts in thousands except for EPS.

Start by determining the formula for each ratio, beginning with the current ratio, followed by the debt ratio, and then earnings per share.

Current assets

/

Current liabilities

=

Current ratio

Total liabilities

/

Total assets

=

Debt ratio

Net income

/

Common shares outstanding

=

Earnings per share

Now compute Greatland's current ratio, debt ratio, and earnings per share. (Round all ratios to two decimal places.)

	Current ratio	Debt ratio	Earnings per share
	3.55	.52

Requirement 2. Compute the three ratios after evaluating the effect of each transaction. Consider each transaction

separately.

(Round all ratios to two decimal places.)

	Current ratio	Debt ratio	Earnings per share
a.

b.

c.

d.

e.