2017 At December 31 Assets Cash Accounts receivable net Merc

2017 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 016 2015 31,612 36,212 $ 37,352 92,537 65, 958 50,808 118,652 83,741 55,199 4,150 282,815 266,282 233,591 s535,796 461,893 381,100 10,180 9,700 Liabilities and Equity Accounts payable Long-term notes payable secured by s 129,411 79,621 51,814 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity es 99,722107,298 84,223 162,500 162,500 162,500 82,563 535,796 461,893 381,100 144, 163112,474 1. Compute the current ratio for the year ended 2017, 2016, and 2015. 2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.

Solution

1.)    Current ratio = Total current assets / Total current liabilities

= [cash + Accounts receivable + merchandise inventory + prepaid expenses] / Accounts payable

2.) Acid-test acid = [cash + Accounts receivable ] / Accounts payable

	Numerator	/	Denominator	=	current ratio
2017	252981	/	129411	=	1.95
2016	195611	/	79621	=	2.46
2015	147509	/	51814	=	2.85