A. Balance Sheet-24/7 Pizza Company 34-7 Pizza Company 2.009 nventory Total Curr

Question

A. Balance Sheet-24/7 Pizza Company 34-7 Pizza Company 2.009 nventory Total Current Asset R 92,000 Total Current Lisbiities OR $1,800 Building 700.000 Total Long-Term QR 950 200 5.028 QR 1,002000 OR 300,000 Equity Shareholders' Equity 1. Wite out the Accounting Equation and then complete it with the elements from within the above Balance Sheet 2 Calculate the Curent Ratio (show your work) 3 Given the general nule of 21, is the Current Ratio within the normally accepted range? 4 Calculahe the Debt/Equity Ratio (show your work). 5 Based on your answer above, does the Company have more debt than equity? Is the Company in a good finandial situation? Briefly explain your answer

Explanation / Answer

1)Accounting equation given by Asset =Liabilites +equity

    1,302,000 = 1,002,000+ 300,000

2)current ratio =current asset/current liability

      = 92000/51800

      = 1.78 : 1

3)since the current asset is more than current liability ,it is within acceptable range

4)Debt to equity =Total liabilites/total equity

        = 1002000/300000

      = 3.34

5)Yes the company has more debt than equity (that is 3.34 times of equity is equal to debt)

The financial situation of the company is not good as the company debt equity ratio is 3.34 which means the liability of company is 3.34 times of shareholders wealth .It might be possible company can go in to liquiduation if it is unable to pay its debt (financial position is not strong )

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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