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35 - • Rule of thumb Strong current ratio is 1.50 Debt...

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Balance Sheet Formats Report format Assets at the top Followed by liabilities and stockholders’ equity Account format Assets on the left Liabilities and stockholders’ equity on the right Income Statement Formats Single-step All revenues and gains grouped together All expenses and losses grouped together Multi-step Includes useful subtotals Gross profit Net revenues minus cost of goods sold Income from operations Net income Current ratio Measure company’s ability to pay current liabilities with current assets
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Unformatted text preview: • Rule of thumb: Strong current ratio is 1.50 Debt Ratio • Proportion of assets that is financed with debt • High debt ratio indicates more risk • S3-14 Current ratio: Current assets = Cash + Accounts Receivable + Inventories + Other current assets $900 + $27,700 + $33,000 = $4,800 = $66,400 Total Current liabilities = $53,600 Current ratio = 66,400 / 53,600 Current ratio = ______...
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