Based on the balance sheets given for Just Dew It: Calculate the current ratio f

Question

Based on the balance sheets given for Just Dew It: Calculate the current ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Calculate the quick ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Calculate the cash ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Calculate the NWC to total assets ratio for each year. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the debt - equity ratio and equity multiplier for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Calculate the total debt ratio and long-term debt ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Explanation / Answer

a) Current ratio = Current Assets/ Current laibilities
Current ratio for 2014 = 103,000/93,800 = 1.098
Current ratio for 2015 = 129,750/104250 = 1.24
b)Quick ratio = (Current Assets - Inventories)/ Current liabilities
Quick ratio of 2014 = (103,000-77,000) /93,800 = 26,000/93,000 = 0.28
Quick ratio of 2015 = (129,750-93,750) /104250 = 26,000/104250 =0.35
c) Cash ratio = Cash/ Current liabilities
Cash ratio of 2014 = 9000/93,800 =0.096 or 0.10
Cash ratio of 2015 = 11250/104250 = 0.11
d) NWC/Total Assets = ( Current Assets- Current liabilities)/ Total assets
NWC/Total Assets of 2014 = (103,000-93,800)/400,000 = 2.30%
NWC/Total Assets of 2015 = (129,750 - 104250)/500,000 = 5.10%
e) Debt equity Ratio = (Current laibilities + Long term debt)/ Total equity
Debt Equity ratio of 2014 = (93800+ 42000)/264200 = 0.51
Debt Equity ratio of 2015 = (104250+ 40,000)/355,750= 0.41
Equity Multipler = Total Assets / Total Equity
Equity Multipler of 2014 = 400,000/264200 = 1.51
Equity Multipler of 2015 = 500,000/355,750 = 1.41
f) Total Debt ratio = Total Liabilities/ Total Assets
Total Debt ratio of 2014 = (93800+ 42,000)/400,000 = 0.34
Total Debt ratio of 2014 = (104250+ 40,000)/500,000 = 0.29
Total long term ratio = Total long terms/ Total Assets
Total Long term debt ratio of 2014 = 42,000/400,000 = 0.11
Total Long term debt ratio of 2015 = 40,000/500,000 = 0.01

Best Of Luck. God Bless

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