Cash Accounts receivable Inventories Prepaid insurance Equip

Cash Accounts receivable Inventories Prepaid insurance Equipment Accumulated depreciation-equipment Patent, net Accounts payable Interest payable Note payable (due in 10, equal annual installments) Common stock Retained earnings Totals $ 61,000 45,000 51,000 21,000 120,000 $ 40,000 46,000 15,000 5,000 120,000 76,000 88,000 $344,000 $344,000 a. Calculate the current ratio b. Calculate the acid-test ratio. c. Calculate the debt to equity ratio. Current Ratio Numerator Current Assets Denominator Current Liabilities Acid-Test Ratio Numerator Current Assets Denominator Current Liabilities Debt to Equity Ratio Numerator Current Assets Shareholders\' Fitv

Solution

Calculate following :

Current Ratio
Numertor	Current assets	=	178000	=	8.90
Denominator	Current Liabilities	=	20000	=
Acid test ratio
Numerator	Current assets-inventory-prepaid exp	=	106000	=	5.30
Denominator	Current liabilities	=	20000	=
Debt to equity ratio
Numerator	Total debt	=	140000	=	0.85
Denominator	Shareholder\'s equity	=	164000	=