AC202 Sando Company analysis

AC202 Sando Company analysis - . = ($148000-$61000)/$62000...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Use the balance sheets of Sando shown below to calculate the following ratios for 2008 (round to the hundredths): (a) Current ratio. (b) Acid-test ratio. (c) Debt ratio. (d) Equity ratio. Solution (a) Current ratio. Current ratio = Current assets /Current liabilities Current assets =Cash +account receivables+ Merchandised inventory +Prepaid insurance Current assets (2008) = 43000+38000+61000+6000 =$148000 Current Ratio =$148000/$62000 =2.387 =2.39 (b) Acid-test ratio Acid test ratio = (Current assets- Merchandised inventory) /Current liabilities
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: . = ($148000-$61000)/$62000 =$87000/$62000= 1.403 =1.40 (c) Debt ratio. Debt ratio = Total debts /Total assets Total debts = Current liabilities +Long term liabilities = $62000+$45000 =$107000 Total assets =$415000 Debt ratio = $107000/$415000 =0.2578 = 25.78% =26% (approximately) (d) Equity ratio. Equity ratio = Equity /Total assets Equity =Common stock +Retained earnings =$150000 +$158000 =$308000 Equity ratio = 308000/415000 =0.7422 = 74.22% =74% (approximately)...
View Full Document

Page1 / 2

AC202 Sando Company analysis - . = ($148000-$61000)/$62000...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online