(Risk-return trade-off) Ramsey 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 a. Compute the firm's current ratio (current assets divided by current liabilities) and the firm's debt ratio (current plus long-term labilities 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 $50 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, you have prepared for the 5-year period 2014-2018 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 ? (Round to two decimal places) 2014 2017 2018 2015 2016 Current ratio (Round to two decimal places.) 2018 2014 2015 2016 2017 Debt ratio % Using both the current ratio and debt ratio, which of the following statements best describes the firm's risk over the 5-year period? (Select the best choice below) O A. The firm's liquidity has risen, while its financial risk has declined. OB. The firm's liquidity has risen, and its financial risk has risen, too. OC. The firm's liquidity has declined, and its financial risk has declined, too. OD. The firm's liquidity has declined, while its financial risk has risen. (Riskrefum trade-off) Ramsey 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 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 $50 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, you have prepared for the 5-year period 20142018. Describe the firm's risk using both the current ratio and debt ratio. c. Which of the financing plans is more risky? Why? b. Alter the financial statements above such that current liabilities remain constant at $50 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, you have prepared for the 5-year period 2014-2018 (Round to two decimal places) 2014 2015 2016 2017 2018 Current ratio (Round to two decimal places.) 2014 2015 2016 2017 2018 Debt ratio % 96 Using both the current ratio and debt ratio, which of the following statements best describes the firm's risk over the 5-year period? (Select the best choice below) O A. The firm's liquidity has declined, while its financial risk has risen. O B. The firm's liquidity has risen, while its financial risk has declined. OC. The firm's liquidity has declined, and its financial risk has declined, too. (Risk-return trade-oll Ramsey 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 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 $50 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, you have prepared for the 5-year period 2014-2018 Describe the firm's risk using both the current ratio and debt ratio. c. Which of the financing plans is more risky? Why? "TRUUNU I WO U Places 2014 2015 2016 2017 2018 Current ratio (Round to two decimal places.) 2014 2015 2016 2017 2018 Debt ratio Using both the current ratio and debt ratio, which of the following statements best describes the firm's risk over the 5-year period? (Select the best choice below.) O A. The firm's liquidity has declined, while its financial risk has risen. OB. The firm's liquidity has risen, while its financial risk has declined O C. The firm's liquidity has declined, and its financial risk has declined, too. OD. The firm's liquidity has risen, and its financial risk has risen, too. percent of the firm's current assets. c. The plan is much more risky to the firm in that the firm's current financial obligations are a much (Select from the drop down menus) Click to select your answer(s) (Click on the following icon in order to copy its contents into a spreadsheet.) Current Assets Fixed Assets Total 2014 $300 700 $1,000 $125 250 625 $1,000 2015 $375 750 $1,125 $225 250 650 $1,125 2016 $450 750 $1,200 $325 250 625 $1,200 2017 $525 775 $1,300 $425 250 625 $1,300 2018 $600 825 $1,425 $525 250 650 $1,425 Current Liabilities Long-term Liabilities Owners' Equity Total Print Done risen, and its financial risk has risen, too. Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Current Assets Fixed Assets Total 2014 $300 700 $1,000 $50 325 625 $1,000 2015 $375 750 $1,125 $50 425 650 $1,125 2016 $450 750 $1,200 $50 525 625 $1,200 2017 $525 775 $1,300 $50 625 625 $1,300 2018 $600 825 $1,425 $50 725 Current Liabilities Long-term Liabilities Owners' Equity Total 650 $1,425 Print Done