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Romeo Juliet Charlie (RJC) Ltd has $600,000 of total assets including current assets of $300,000. The following information has also been produced for RJC Ltd:
Romeo Juliet Charlie (RJC) Ltd has $600,000 of total assets including current assets of $300,000. The following information has also been produced for RJC Ltd: The three owners have contributed $100,000 each. The entity has always distributed all the profits. Total Liabilities are $300,000. The entity owes $125,000 to trade creditors/accounts payable. The remainder of the entity's loan financing is via a mortgage loan. The entity made a Net Profit after tax this year of $80,000. The profit figure includes $20,000 of interest expense associated with the loan. Required: In the boxes provided state whether each statement is true or false. Please also show workings to support your answer in the box provided. a. The entity's current ratio is 2:1. (1 mark) b. The entity uses more debt financing than equity financing. (1 mark) C. The entity's net assets are $400,000. (1 mark) d. The entity's debt ratio is 50%. (1 mark) Type your response directly into the template in the text box below
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