Balance Sheet as of December 31, 2007 and 2008. Assets (2007): Assets (2008 ) Ca

ID: 2638843 • Letter: B

Question

Balance Sheet as of December 31, 2007 and 2008.

Assets (2007): Assets (2008)

Cash 440 Cash 560

Accounts Receivable 270 Accounts Receivable 310

Inventory 680 Inventory 630

Net Fixed Assets 2500 Net Fixed Assets 3000

Total Assets (2007): 2,500 Total Assets (2008): 4500

Liabilities and Owner's Equity (2007) Liabilities and Owner's equity (2008)

Accounts Payable 450 Accounts payable 390

Notes Payable 300 Notes payable 280

Long Term Debt 1700 Long Term debt 2000

Common Stock 1000 Common Stock 800

Retained earnings 440 Retained earnings 1030

Total liabilities+owner's equity(2007): 3890 Total liabilities+owner's equity (2008): 4500

2008 Income statement

Sales: 5790

Cost of Goods Sold: 4140

Depreciation: 380

Interest: 60

Taxes: 315

Net Income: 895

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Use the balance sheets of the ABC compy above to compute the following ratios:

A. Current Ratio

B. Quick Ratio

C. Cash Coverage Ratio

D. Debt equity Ratio

E Total Debt ratio.

Current Ratio = Current assets/Current liabilities
2007 = (440+270+680)/(450+300) = 1.8533
2008 = (560+310+630)/(390+280) = 2.2388

Quick Ratio = Current assets-Inventories/Current liabilities
2007 = (440+270)/(450+300) = 0.9467
2008 = (560+310)/(390+280) = 1.2985

Cash Coverage Ratio = Cash+Cash equivalentsCurrent liabilities
2007 = (440)/(450+300) = 0.5867
2008 = (560)/(390+280) = 0.8358

Debt equity Ratio = Long term debt/Shareholder's equity
2007 = (1700)/(1000) = 1.70
2008 = (2000)/(800) = 2.50

Total Debt ratio = Total debt/Total assets
2007 = (1700)/(2500) = 0.68
2008 = (2000)/(4500) = 0.44

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