XYZ Company reports the following information: Cash $75,000 Short-term investmen

Question

XYZ Company reports the following information:

Cash                                             $75,000

Short-term investments                        50,000

Accounts Receivable                 30,000

Inventory                                     28,000

Prepaid Expenses                                  25,000

Long-term investments             110,000

PPE Net                                         210,000

Current Liabilities                                 60,000

Long-term Liabilities                $150,000

Calculate the following:

Current ratio

Quick ratio

Debt to assets

Debt to equity

Explanation / Answer

Current ratio = Current assets/Current liabilities = (75000+50000+30000+28000+25000)/60000 = 3.47 Quick ratio = (Cash+Short term investments+Receivables)/Current liabilities = (70000+50000+30000)/60000 = 2.50 Debt to Assets = Total debt/Total assets = (60000+150000)/(75000+50000+30000+28000+25000+110000+210000) = 0.40 Debt/Equtiy = 0.40/(1-0.40) = 0.67

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.