I am having difficulty understanding ratios. I am looking for someone that is able to explain to me well what I need to do in order to get the information for the ratios (step by step).

The purpose of this SLP is to apply ratio analysis to assess the financial health of ABC Company. Use the balance sheet presented in the case during this module to compute solvency and efficiency ratios. Compute three ratios based on balance sheet accounts for which you have sufficient information.

Assume that ABC Company is a small specialty retail store. Ratios are relevant when assessed over time or across companies. IBIS is a comprehensive resource containing market research and statistics, which can be used to compare ABC Company to the industry and leaders in the industry.

1. Show the computation of the three ratios.

ABC Company Balance Sheet December 31, 20XX Assets Liabilities Current assets Current liabilities Cash Accounts payable S 18,000 Accounts recievable Interest payable 8 000 Interest receivable 1 000 Inventory 30 000 Total current assets 144,000 Total current liabilities S 26,000 Long-term assets Long-term liabilities Equipment (net of depreciation) 128 000 Note payable 90 000 Total long-term assets 128,000 otal long-term liabilities S 90,000 quity Common stock 10,000 Paid-in capital 50,000 Retained earnings 96 000 otal equity 156 000 otal assets Total liabilities and equity 272 000