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ED-21 Analyzing the ability to pay liabilities Big Bend Photo Shop has asked you to determine whether the company's ability to pay current liabilities and
ED-21 Analyzing the ability to pay liabilities Big Bend Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2016. To answer this question, you gather the following data: 2016 $ 56,000 31,000 134,000 257,000 540,000 285,000 46,000 170,000 54,000 2015 Cash Short-term Investments Net Accounts Receivable Merchandise Inventory Total Assets Total Current Liabilities Long-term Notes Pavable Income from Operations Interest Expense $ 51,000 0 136,000 297,000 550,000 202,000 58,000 178,000 45,000 Compute the following ratios for 2016 and 2015, and evaluate the company's ability to pay its current liabilities 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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