Bethesda Mining Company reports the following balance sheet information for 2013

Question

Bethesda Mining Company reports the following balance sheet information for 2013 and 2014. Required: Based on the balance sheets given for Bethesda Mining, calculate the following financial ratios for each year: Current ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Quick ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Cash ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Debt-equity ratio and equity multiplier. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Total debt ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Explanation / Answer

a) Current ratio = Current assest / Current Liabilities

                           2013 = 228732 / 278942 = 0.82

                           2014 = 326509 / 338199 = 0.96

b) Quick Ratio = Current assets - inventory / Current liabilties

                          2013 = 228732 - 128441 / 278942 = 100291 / 278942 = 0.35

                          2014 = 326509 - 194689 / 338199 = 131820 / 338199 = 0.39

c) Cash Ratio = Cash + Cash equivalents / Current liabilities, in this case cash equivalents are nill

                          2013 = 40010 / 278942 = 0.14

                          2014 = 51181 / 338199 = 0.15    

d) Debt Euity ratio = Total Liabilities / Total Equity = Short term debt(current liabilities) + Long term liabilities / Common stock and paid in surplus + accumulated retained earnings

                           2013 = 278942 + 241000 / 214000 + 152537 = 519942 / 366537 = 1.41

                           2014 = 338199 + 177750 / 214000 + 186038 = 515949 / 400038 = 1.28

     Equity multiplier = Total assets / Total stock holders equity = Total assets / Common stock and paid in surplus + accumulated retained earnings

                           2013 = 886479 / 214000 + 152537 = 886479 / 366537 = 2.41

                           2014 = 915987 / 214000 + 186038 = 915987 / 400038 = 2.28

e) Total Debt ratio = Total liabilities / Total assets = Short term debt(current liabilities) + long term liabilities / total assets

                           2013 = 278942 + 241000 / 886479 = 519942 / 886479 = 0.58

                           2014 = 338199 + 177750 / 915987 = 515949 / 915987 = 0.56

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