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TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS $1,369 1,008 1,489 157 44 4,066 3,137 168 $7,371 $1,427 876 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes $429 104 132 $242 98 141 Current portion of long-term debt Total current liabilities Long-term debt Total liabilities 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (So.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS $1,369 1,008 1,489 157 44 4,066 3,137 168 $7,371 $1,427 876 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes $429 104 132 $242 98 141 Current portion of long-term debt Total current liabilities Long-term debt Total liabilities 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (So.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Given the balance sheet for the Moderately Large Corporation (Table 4–4), answer the following:

  1. For each year, calculate the following ratios: current, quick, debt-to-asset, and debt-to-equity.
  2. In a written explanation, state what each ratio means. c. Compare the ratios for the 2-year period and determine if the MLC is suf-ficiently liquid.
  3. How well is the MLC managing its debt?

 

TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net $1,427 876 $1,369 1,008 1,489 157 Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS 44 4,066 3,137 168 $7,371 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes Current portion of long-term debt Total current liabilities Long-term debt Total liabilities $429 104 132 $242 98 141 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (S0.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Transcribed Image Text:TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net $1,427 876 $1,369 1,008 1,489 157 Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS 44 4,066 3,137 168 $7,371 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes Current portion of long-term debt Total current liabilities Long-term debt Total liabilities $429 104 132 $242 98 141 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (S0.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Expert Solution
Step 1

Ratio analysis is one of the most common ways used to determine the company’s financial performance. Liquidity ratios are the ratios that help in determining company’s ability to pay off its short term debt obligations.

 

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