The balance sheet and income statement shown below are for OLD Inc. Note that th

Question

The balance sheet and income statement shown below are for OLD Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
Balance Sheet (in millions)
Assets
Cash and securities 2,500
Accounts receivable 11,500
Inventories 16,000
Total current assets 30,000
Net plant and equipment 20,000
Total Assets 50,000

Liabilities and Equity
Accounts payable 9,500
Notes payable 7,000
Accruals 5,500
Total current liabilities 22,000
Long-term bonds 15,000
Total debt 37,000
Common stock 2,000
Retained earnings 11,000
Total common equity 13,000
Total liabilities and equity 50,000
Income Statement (in millions): Net sales 87,500 Operating costs expect depreciation 81,813 Depreciation 1,531 EBIT 4,156 Less Interest 1,375 EBT 2,781 Taxes 973 net Income 1,808 Other Data: Shares outstanding (millions) 500 Common dividends $632.73 Int rate on notes payable & LT bonds 6.25% Federal plus state income tax rate 35% Year-end stock price $43.39
1. What The balance sheet and income statement shown below are for OLD Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
Balance Sheet (in millions)
Assets
Cash and securities 2,500
Accounts receivable 11,500
Inventories 16,000
Total current assets 30,000
Net plant and equipment 20,000
Total Assets 50,000

Liabilities and Equity
Accounts payable 9,500
Notes payable 7,000
Accruals 5,500
Total current liabilities 22,000
Long-term bonds 15,000
Total debt 37,000
Common stock 2,000
Retained earnings 11,000
Total common equity 13,000
Total liabilities and equity 50,000
Income Statement (in millions): Net sales 87,500 Operating costs expect depreciation 81,813 Depreciation 1,531 EBIT 4,156 Less Interest 1,375 EBT 2,781 Taxes 973 net Income 1,808 Other Data: Shares outstanding (millions) 500 Common dividends $632.73 Int rate on notes payable & LT bonds 6.25% Federal plus state income tax rate 35% Year-end stock price $43.39
1. What

Explanation / Answer

1)Current ratio = Current assets / Current liabilities = $30,000 / $22,000 = 1.36 2)Quick ratio = (Current assets - Inventories)/ Current liabilities = ($30,000 - $16,000) / $22,000 = 0.636 Only the balance sheet is given and the income statement is not given. Hence it is difficult to find out some of the ratios without income statement. If u can provide the complete information, i can help you out.

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