Mashayekhi and Meckstroth Manufacturing Inc Consolidated Bal

Mashayekhi and Meckstroth Manufacturing, Inc. Consolidated Balance Sheets as of September 30 (in thousands) ASSETS Current assets: 2017 2016 Cash and equivalents Short-term investments Accounts receivable Inventories Prepaid insurance $ 2,140 $ 4,000 980 7,278 4,195 1,485 680 90 11,667 10,085 22,330 22,330 84 Total current assets Property, plant and equipment Accumulated depreciation - PP&E; 990 Net PP&E; 21,340 21,450 TOTAL ASSETS $33,007 $31,535 LIABILITIES AND OWNERS\' EQUITY Current liabilities: S 1,325 $ 970 Accounts payable Notes payable Wages payable Income tax payable 550 17 17 Total current liabilities Long-term debt Other liabilities TOTAL LIABILITIES 1,9001,455 9,860 13,460 6,800 $20,360 $21,715 8,600 Owners\' equity: Common stock - 200 shares outstanding Capital in excess of par value Retained earnings 2 2 12,637 9,810 $12,647 $ 9,820 $33,007 $31,535 TOTAL OWNERS\' EQUITY TOTAL LIABILITIES AND OWNERS\' EQUITY

Solution

a). Solution :- Debt ratio = Total liabilities / Total assets.

b). Solution :- Current ratio = Total current assets / Total current liabilities.

c). Solution :- Times interest earned ratio = Earnings before interest and taxes / Interest expense.

d). Solution :- Quick ratio (Acid test ratio) = Liquid assets / Total current liabilities.

( Liquid assets = Cash and equivalents + Accounts receivable + Short term investments)

Liquid assets for Year 2017 = 2140 + 1485 + 7278 = $ 10903.

Liquid assets for Year 2016 = 4000 + 980 + 4195 = $ 9175.

e). Inventory turnover ratio = Cost of goods sold / Average inventory.

(Average inventory = 680 + 820 / 2 = 1500 / 2 = $ 750

Cost of goods sold = Sales revenue - Gross profit = 20110 - 11352 = $ 8758)

Accordingly,  Inventory turnover ratio for Year 2017 = 8758 / 750

= 11.7 Times.

Conclusion :- Inventory turnover ratio for Year 2017 = 11.7 Times.

Ratio	Year 2017	Year 2016
Debt ratio	20360 / 33007 = 0.6	21715 / 31535 = 0.7