(Risk return trade-off) CL Marshall Liquors owns and operates a chain of beer and wine shops throughout the Dallas-Fort Worth metroplex. The rapidly expanding population of the area has resulted in the firm requiring a growing amount of funds. Historically, the firm has reinvested earnings and borrowed using short-term bank notes. Balance sheets for the last 5 years are found in the popup window: LOADING... . a. Compute the firm's current ratio (current assets divided by current liabilities) and the firm's debt ratio (current plus long-term liabilities divided by total assets) for the 5-year period found above. Describe the firm's risk using both the current ratio and debt ratio. b. Alter the financial statements above such that current liabilities remain constant at $ 60 and long-term liabilities increase in the amount needed to meet the firm's financing requirements. Compute the firm's current ratio (current assets divided by current liabilities) and the firm's debt ratio (current plus long-term liabilities divided by total assets) using the following revised financial statements, LOADING... , you have prepared for the 5-year period 2011long dash 2015. Describe the firm's risk using both the current ratio and debt ratio. c. Which of the financing plans is more risky? Why? a. Compute the firm's current ratio and the firm's debt ratio for the 5-year period using the firm's balance sheet found in the following table:

2011 2012 2013 2014 2015

Current assets 130 160 190 220 250

Fixed assets 260 280 300 320 340

Total 390 440 490 540 590

Current liabilities 60 100 140 180 220

Long-term liabilities 120 120 120 120 120

Owners' equity 210 220 230 240 250

Total 390 440 490 540 590