LiabilitiesLiquid assetsMonthly credit paymentsMonthly savings$ 8, 800$ 5,000$ 668$ 150Net worthCurrent liabilitiesTake-home payGross income$ 59,000$ 1, 350$ 2,600$ 2,900a. Debt ratiob. Current ratio

Formula: Debt ratio = Liabilities / Net worth

Answered: Liabilities Liquid assets Monthly…

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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Statement of Financial Position Cash 10,000 Accounts payable $15,000 Accounts receivable 70,548 Notes payable 35,548 Inventory 20,000 Current liabilities $50,548 Current assets $100,548 Long-term debt 200,000 Fixed assets 500,000 Equity $350,000 Total assets $600,548 Total liabilities & equity $600,548 Questions: What are the three components of a credit policy? Does the company’s current credit policy satisfy these three components? What are the effective annual costs for the two proposed credit policy alternatives? If the average borrowing rate for the company’s customers is 15%, will these credit policies be attractive to these customers?
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Cash $ 30,000 Marketable securities $ 25,000 Accounts Receivable Inventory Total current Assets Net Fixed Assets Total Assets Accounts Payable $ 120,000 Short-term Notes Payable Accrued Liabilities $ 20,000 Total Current Liabilities Long-Term Debt Total Debt Stockholder's Equity $ 600,000 Total Liabilites and Equity Assumptions: Sales = $1,825,000 Gross profit margin = 30% Inventory Turnover = 7.0 365 days per year DSO = 40 days Current ratio = 1.40 Total Asset Turnover = 1.25 Complete the Balance Sheet below based on the given information

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Liabilities Liquid assets Monthly credit payments Monthly savings $ 8, 000 $ 5,000 $4668 $ 150 Net worth Current liabilities Take-home pay Gross income $ 59,000 $1,350 $ 2,600 $ 2,900 a. Debt ratio b. Current ratio