How has the firms liquidity changed from 2017 to 2016 Compute the current ratio quick ratio and determine if the firms liquidity has increased or decreased What are some implications for this result How has the firms long term solvency changed from 2017 to 2016 Compute the debt ratio and determine if the firm has increased or decreased leverage Compute the firms times interest earned cash coverage ratio Can the firm easily make their interest payments Table 1 Unilate Textiles December 31 Comparative Balance Sheets (millions of dollars) 2017 2016 Assets Cash and marketable securities $15 0 $40 0 Accounts receivable 180 0 160 0 Inventory 270 0 200 0 Total current assets $465 0 $400 0 Gross plant and equipment $680 0 $600 0 Less Accumulated depreciation (300 0) (250 0) Net plant and equipment 380 0 350 0 Total assets $845 0 $750 0 Liabilities and equity Accounts payable $30 0 $15 0 Accruals 60 0 55 0 Notes payable 40 0 35 0 Total current liabilities $130 0 $105 0 Long term bonds 300 0 255 0 Total liabilities $430 0 $360 0 Common stock 130 0 130 0 Retained earnings 285 0 260 0 Owner's equity $415 0 $390 0 Total liabilities and equity $845 0 $750 0 NOTE Unilate has no preferred stock, so owner's equity includes common equity only

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Posted on Jul 20, 2024

1. Compute the current ratio & quick ratio and determine if the firms liquidity has increased or decreased?
2. What are some implications for this result?
How has the firms long-term solvency changed from 2017 to 2016?
1. Compute the debt ratio and determine if the firm has increased or decreased leverage?
2. Compute the firms times-interest earned & cash coverage ratio?
3. Can the firm easily make their interest payments?

Table 1: Unilate Textiles: December 31 Comparative Balance Sheets (millions of dollars)
	2017		2016
*Assets*
Cash and marketable securities		$15.0		$40.0
Accounts receivable		180.0		160.0
Inventory		270.0		200.0
Total current assets		$465.0		$400.0
Gross plant and equipment	$680.0		$600.0
Less: Accumulated depreciation	(300.0)		(250.0)
Net plant and equipment		380.0		350.0
Total assets		$845.0		$750.0

*Liabilities and equity*
Accounts payable		$30.0		$15.0
Accruals		60.0		55.0
Notes payable		40.0		35.0
Total current liabilities		$130.0		$105.0
Long-term bonds		300.0		255.0
Total liabilities		$430.0		$360.0
Common stock		130.0		130.0
Retained earnings		285.0		260.0
Owner's equity		$415.0		$390.0
Total liabilities and equity		$845.0		$750.0

NOTE: Unilate has no preferred stock, so owner's equity includes common equity only.