JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets Assets Liablities and Owner

Question

JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets Assets Liablities and Owners' Equity 2018 $ 58,400 61,820 25,080 2017 2018 2017 Current assets Current llablities Cash Accounts $ 14,200 18,260 23,100 54,780 $85,000 $96,140 Accounts payable Notes payable 19,000 23,400 receivable Inventory 51,800 Total Total $ 81,800 86,900 Long-term debt $ 32,000 22,000 Owners' equity Common stock and pald-In 44,000 44.000 287100 $286,200 331100 Total liabilities and owners $400,000 440,000 surplus Retalned earnings 242.200 Net plant and equipment $315,000 $343,860 Total Total assets $400,000 $440,000 Based on the balance sheets given for Just Dew It a. Calculate the current ratio for each year. (Do not round Intermediate caiculations b. Calculate the quick ratlo for each year. (Do not round Intermediate calculetlons and c. Calculate the cash ratlo for each year. (Do not round Intermediate calculetions and d. Calculate the NWC to total assets ratio for each year. (Do not round Intermediete and round your answers to 2 decimel places, e.g., 32.16.) round your enswers to 2 declmal places, e.g., 32.16.) round your answers to 2 declmel places, e.g., 32.16.) celculetions. Enter your answers as a percent rounded to 2 decimel pleces, e.g. 32.16.) e. Calculate the debt-equlty ratio and equlty multiplier for each year. (Do not round Intermediete calculetlons and round your answers to 2 decimel pleces, e.g., 32.16.) Calculate the total debt ratio and long-term debt ratio for each year. (Do not round Intermediete calculetions and round your answers to 2 decimal places, e.g., 32.16.) f. 2017 2018 a. Current ratio b. Quick ratio c Cash ratio d. NWC ratio e. Debt-equity ratio times times times times times times times times times imes times times times imes Equity multiplier f. Total debt ratio Long-term debt ratio

Explanation / Answer

Calculation of Ratios a) Current Ratio = Current assets / Current Liabilities 2017 2018 Current Assets 85000 96140 / Current Liabilities 81800 86900 Current Ratio           1.04 times           1.11 times b) Quick Ratio = Liquid Current assets / Current Liabilities 2017 2018 Liquid Current Assets 33200 41360 / Current Liabilities 81800 86900 Quick Ratio           0.41 times           0.48 times c) Cash Ratio = Cash plus cash equivalents / Current Liabilities 2017 2018 Cash plus cash equivalents 14200 18260 / Current Liabilities 81800 86900 Cash ratio           0.17 times           0.21 times d) NWC / Total assets ratio = (Current assets - Current Liabilities) / Total Assets 2017 2018 NWC 3200 9240 / Total assets 400000 440000 NWC / Total Assets 0.80% 2.10% e) Debt equity ratio = Long term debt / Total equity 2017 2018 Long term debt 32000 22000 / Total Equity 286200 331100 Debt equity ratio           0.11 times           0.07 times Equity Multiplier = Total assets / Total Equity 2017 2018 Total Assets 400000 440000 / Total Equity 286200 331100 Equity Multiplier             1.40 times           1.33 times f) Total debt ratio = Total debt / Total assets 2017 2018 Total debt 113800 108900 / Total Assets 400000 440000 Total debt ratio           0.28 times           0.25 times Long term debt ratio = Total long term debt / Total assets 2017 2018 Long term debt   32000 22000 / Total Assets 400000 440000 Long term debt ratio           0.08 times           0.05 times

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