Data Table 2016 2015 Cash Shortterm Investments Net Accounts

Data Table 2016 2015 Cash Short-term Investments Net Accounts Receivables Merchandise Inventory Total Assets Total Current Liabilities Long-term Note Payable Income from Operations Interest Expense $ 48,000 $ 45,000 0 110,000 116,000 277,000 277,000 495,000 520,000 265,000 212,000 48,000 56,000 160,000 168,000 48,000 44,000 34,000

Solution

1.

Current Ratio is the ratio between current assets and current liabilities. Here all the assets are current assets and thus for 2015 and 2016 current ratio would be 2.45 and 1.86 respectively.

2.

Cash Ratio is the ratio of cash and cash equivalents to current liabilites. Since short term investment should not be regarded as cash equivalents in abence of specific information regarding them, we will take ratio as cash to current liabilities. Thus, cash ratio would be 0.18 and 0.21 for 2016 and 2015 respectively. However if we consider short term investmnet also than ratios would be 0.30 and 0.21 for 2015 and 2016

3. The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. Quick assets are current assets that can be converted to cash within 90 days or in the short-term. Assuming all the assets are quick assets and can be liquidated within 90 days except inventory, acid test ratio would be for 2016 and 2015 acid test ratio would be 0.82 and 1.14 respectively.

4. Debt Ratio is a financial ratio that indicates the percentage of a company\'s assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets. Thus debt ratio for 2016 and 2015 would be 1.58 and 1.94.

Your 5th part is quite small and blurred. Moreover an expert is allowed to answer initial 4 subparts in case of multi part questions. I hope this will be helpful. Thanks