1000 Compute the following financial statement ratios for 2013: Altoid Co.\'s cu

Question

1000

Compute the following financial statement ratios for 2013:

Altoid Co.'s current ration. Round answer to two decimal.

Altoid Co.'s acid-test ration. round answer to two decimal.

Altoid Co's debt to equity ratio. Round to two decimal.

cash 150 short term invest 200 A/R 300 Inventories 450 Property, plant, equip 1100 Total Assets 2200 Liabilites current liabilities 450 long term liabilites 600 paid in capital 150 retained earnings

1000

total liabilites 2200 Net Sales 7700 Operating expenses 7110 Income before interest and taxes 590 Interest expense 90 Income tax expense 150 Net Income 350

Explanation / Answer

Current ratio = Current assets / Current liabilities = ( cash + short term investments + accounts receivable + inventories) / Current liabilities = (150 + 200 + 300 + 450) / 450 = 2.44 :1

Acid test ratio = ( Current assets - inventories - prepaid expenses) / Current liabilities = ( 150 + 200 + 300) / 450

= 1.44:1

Debt to equity ratio = Liabilities / Stockholders' equity = (450 +600) / (150+1,000) = 0.91

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