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Business
Accounting
2018 2017 Cash $ 58,000 $ 47,000 Short-term Investments 34,000 Net Accounts Receivable 140,000 124,000 Merchandise Inventory 217,000 272,000 Total Assets 530,000 565,000 Total Current Liabilities 288,000 205,000 Long-term Notes Payable 40,000 50,000 Income from Operations 165,000 158,000 Interest Expense 55,000 41,000

2018 2017 Cash $ 58,000 $ 47,000 Short-term Investments 34,000 Net Accounts Receivable 140,000 124,000 Merchandise Inventory 217,000 272,000 Total Assets 530,000 565,000 Total Current Liabilities 288,000 205,000 Long-term Notes Payable 40,000 50,000 Income from Operations 165,000 158,000 Interest Expense 55,000 41,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Analyzing the ability to pay liabilities

Big Beautiful Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you gather the following data:

Compute the following ratios for 2018 and 2017, and evaluate the company’s ability to Pay its current Liabilities and total liabilities:

a. Current ratio

b. Cash ratio

c. Acid-test ratio

d. Debt ratio

e. Debt to equity ratio

2018 2017 Cash $ 58,000 $ 47,000 Short-term Investments 34,000 Net Accounts Receivable 140,000 124,000 Merchandise Inventory 217,000 272,000 Total Assets 530,000 565,000 Total Current Liabilities 288,000 205,000 Long-term Notes Payable 40,000 50,000 Income from Operations 165,000 158,000 Interest Expense 55,000 41,000
Transcribed Image Text:2018 2017 Cash $ 58,000 $ 47,000 Short-term Investments 34,000 Net Accounts Receivable 140,000 124,000 Merchandise Inventory 217,000 272,000 Total Assets 530,000 565,000 Total Current Liabilities 288,000 205,000 Long-term Notes Payable 40,000 50,000 Income from Operations 165,000 158,000 Interest Expense 55,000 41,000
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