Question

Given on the balance sheets given for Just dew It, calculate the following financial ratios for each year:_________.

a. Current ratio.
b. Quick ratio.
c. Cash ratio.
d. NWC to total assets ratio.
e. Deb-equity ratio and equity multiplier.
f. Total debt ratio and long-term debt ratio.

Answer 1

a. Current ratio = current assets / current liabilities

• 2014 = $90,717 / $62,939 = 1.44
• 2015 = $100,617 / $66,442 = 1.51

b. Quick ratio = (current assets - inventory) / current liabilities

• 2014 = ($90,717 - $51,163)/ $62,939 = 0.63
• 2015 = ($100,617 - $56,295)/ $66,442 = 0.67

c. Cash ratio = (cash + cash equivalents) / current liabilities

• 2014 = $11,135 / $62,939 = 0.18
• 2015 = $13,407 / $66,442 = 0.20

d. NWC to total assets ratio = net working capital / total assets

• 2014 = $27,778 / $417,173 = 0.07
• 2015 = $34,175 / $458,177 = 0.07

e. Debt-equity ratio = total debt / total equity

• 2014 = $106,939 / $310,234 = 0.34
• 2015 = $105,442 / $352,735 = 0.30

equity multiplier = total assets / total equity

• 2014 = $417,173 / $310,234 = 1.34
• 2015 = $458,177 / $352,735 = 1.30

f. Total debt ratio = liabilities / assets

2014 = $106,939 / $417,173 = 0.26

2015 = $105,442 / $458,177 = 0.23

long-term debt ratio = long term liabilities / assets

• 2014 = $44,000 / $417,173 = 0.11
• 2015 = $39,000 / $458,177 = 0.09