Bethesda Mining Company reports the following balance sheet information for 2015
ID: 2819047 • Letter: B
Question
Bethesda Mining Company reports the following balance sheet information for 2015 and 2016. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2015 and 2016 2015 2016 2015 2016 Assets Liabilities and Owners' Equity Current liabilities Current assets $ 26,530 34,778 Accounts payable Cash Accounts receivable Inventony $194,422 $202,111 89,520 141,088 $283,942 $343,199 $246,000 $182,750 78,139 134,324 201,260 57,781 Notes payable Total $218,635 $314,177 Long-term debt Owners' equity Total Common stock and paid-in surplus S209,000 Accumulated retained earnings 136,940 S345,940 S209,000 168.456 $377,456 Fixed assets Net plant and $657,247 $589,228 Total equipment Total assets 875,882 $903,405Total liabilities and owners' equity $875,882 S903,405 Based on the balance sheets given for Bethesda Mining, calculate the following financial ratios for each year. a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g, 32.16.) Current ratio 2015 2016 imes times b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Quick ratio 2015 2016 times imes c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash ratio 2015 2016 times imes d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Debt-equity ratioEquity multiplier 2015 2016 times times times times e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Total debt ratio 2015 2016 times timesExplanation / Answer
a. Current ratio = Current assets/current liabilities
Current ratio (2015) = 218635/283942 = 0.77
Current ratio (2016) = 314177/343199 = 0.92
b. Quick ratio = (Current assets - Inventory)/ current liabilties
Quick ratio (2015) = (218635-134324)/283942 = 0.30
Quick ratio (2016) = (314177-201260)/343199 = 0.33
c. Cash ratio = Cash / Current liabilties
Cash ratio (2015) = 26530/283942 = 0.09
Cash ratio (2016) = 34778/343199 = 0.10
d. Debt to equity ratio = Total liabilties/ total equity and Equity multiplier = 1+ debt-to-equity
Debt to equity (2015) = 283942+246000)/345940 =1.53
Debt to equity (2016) = (343199+182750)/377456 = 1.39
Equity multiplier (2015) = 1+153 = 2.53
Equity multiplier (2016) = 1+1.39 = 2.39
e. Total debt ratio= Total liabilties/ total assets
Debt ratio (2015) =(283942+246000)/875862 = 0.61
Debt ratio (2016) = (343199+182750)/903405 = 0.58
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