E13.17 (LO 4) (Ratio Computations and Discussion) Sprague Company has been operating for several years, and on December 31, 2020, presented the following balancesheet.Sprague CompanyBalance SheetDecember 31, 2020a. Current ratio.b. Acid-test ratio.c. Debt to assets ratio.d. Return on assets.$ 40,000CashReceivablesInventory75,00095,000Plant assets (net) 220,000$430,000Accounts payable $ 80,000Mortgage payable140,000Common stock ($1 par) 150,00060,000Retained earnings$430,000The net income for 2020 was $25,000. Assume that total assets are the same in 2019 and 2020.InstructionsCompute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of thecompany.

a. Calculate current ratio: Current ratio = current assets / current liabilities Current ratio =…

E13.17 (LO 4) (Ratio Computations and Discussion) Sprague Company has been operating for several years, and on December 31, 2020, presented the following balance sheet. a. Current ratio. b. Acid-test ratio. Sprague Company Balance Sheet December 31, 2020 c. Debt to assets ratio. d. Return on assets. $ 40,000 Cash Receivables 75,000 95,000 Inventory Plant assets (net) 220,000 $430,000 The net income for 2020 was $25,000. Assume that total assets are the same in 2019 and 2020. Instructions Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company. $ 80,000 140,000 Accounts payable Mortgage payable Common stock ($1 par) 150,000 Retained earnings 60,000 $430,000

E13.17 (LO 4) (Ratio Computations and Discussion) Sprague Company has been operating for several years, and on December 31, 2020, presented the following balance sheet. a. Current ratio. b. Acid-test ratio. Sprague Company Balance Sheet December 31, 2020 c. Debt to assets ratio. d. Return on assets. $ 40,000 Cash Receivables 75,000 95,000 Inventory Plant assets (net) 220,000 $430,000 The net income for 2020 was $25,000. Assume that total assets are the same in 2019 and 2020. Instructions Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company. $ 80,000 140,000 Accounts payable Mortgage payable Common stock ($1 par) 150,000 Retained earnings 60,000 $430,000

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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