Balance sheet data for Kamel Corporation follow. Current assets $ 240,000 Long-t

Question

Balance sheet data for Kamel Corporation follow.


Current assets $ 240,000
Long-term assets (net) 760,000

Total assets $ 1,000,000

Current liabilities $ 150,000
Long-term liabilities 450,000

Total liabilities 600,000
Total stockholders' equity 400,000

Total liabilities and stockholders’ equity $ 1,000,000


Required:

Compute the following: (Round your answers to 1 decimal place. Omit the "$" & "%" signs in your response.)


Working capital $______
Current ratio ____: 1
Debt to assets ratio ____%
Debt to equity ratio _______: 1

Explanation / Answer

Working capital: Working capital = Current assets - Current liabilities Here, Current assets are = $240,000            Current liabilities = $150,000 Working Capital = $240,000 - $150,000                               = $90,000 Therefore Working capital as $90,000. Current ratio: Current ratio     = Current assets/Current liabilities                            = $240,000/$150,000                            = 1.6 : 1 Debt to assets ratio:                Debt to assets ratio   = Total liabilities/Total assts                 Total assets are         = 1,000,000                 Total liabilities          = 600,000               Debt to assets ratio     = 600,000/1,000,000                                                     = 0.6                                                     = 60% Debt to Equity ratio:                Debt to equity ratio       = Total liabilities/Shareholders' equity                Total liabilities are        = 600,000                Shareholders' equity is   = 400,000                Debt to equity ratio         = 600,000/400,000                                                           = 1.5:1 Therefore: Working capital        = $90,000 Current ratio             = 1.6:1 Debt to assets ratio = 60% Debt to equity ratio = 1.5:1                Debt to equity ratio       = Total liabilities/Shareholders' equity                Total liabilities are        = 600,000                Shareholders' equity is   = 400,000                Debt to equity ratio         = 600,000/400,000                                                           = 1.5:1 Therefore: Working capital        = $90,000 Current ratio             = 1.6:1 Debt to assets ratio = 60% Debt to equity ratio = 1.5:1

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