Question:
Refer to the trial balance information in BE 3–5. Calculate the (a) current ratio, (b) acid-test ratio, and (c)
debt to equity ratio.
Answer:
(a) Current assets Current liabilities
($55,000 + 39,000 + 45,000 + 15,000) ($12,000 + 2,000 + 10,000)
$154,000 $24,000 = 6.42
(b) (Cash + Short-term investments + Accounts receivable) Current liabilities
($55,000 + 0 + 39,000) $24,000 = 3.92
(c) Total liabilities Shareholders’ equity
$24,000 Current liabilities + 90,000 Long-term liabilities = $114,000
$70,000 Common stock + 76,000 Retained earnings = $146,000
$114,000 $146,000 = .78
Refer to the trial balance information in BE 3–5. Calculate the (a) current ratio, (b) acid-test ratio, and (c)
debt to equity ratio.
Answer:
(a) Current assets Current liabilities
($55,000 + 39,000 + 45,000 + 15,000) ($12,000 + 2,000 + 10,000)
$154,000 $24,000 = 6.42
(b) (Cash + Short-term investments + Accounts receivable) Current liabilities
($55,000 + 0 + 39,000) $24,000 = 3.92
(c) Total liabilities Shareholders’ equity
$24,000 Current liabilities + 90,000 Long-term liabilities = $114,000
$70,000 Common stock + 76,000 Retained earnings = $146,000
$114,000 $146,000 = .78
