The balance sheet at December 31, 2012, 2013, and 2014 and income statement for the years ended
Question:
The balance sheet at December 31, 2012, 2013, and 2014 and income statement for the years ended December 31, 2012, 2013, and 2014 for Ojibway Inc. include the following data:
Requirements
Use the years of data to answer the following:
1. Calculate the current ratio for 2012, 2013, and 2014.
2. Calculate the debt ratio for 2012, 2013, and 2014.
3. Evaluate each ratio and determine if the ratio has improved or deteriorated over the three years. Explain what the changes mean.
Ojibway Inc. Balance Sheet As at December 31 (in thousands) Furniture and equipment, net Total liabilities Shareholders' equity Shareholders' equity Ojibway Inc. Income Statement For the year ended December 31 (in thousands) Total Income tax expense
Step by Step Answer:
Req 1 Req 2 Req 3 The current ratio has improved over the 3 years som...View the full answer
Financial Accounting
ISBN: 978-0133472264
5th Canadian edition
Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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