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The balance sheet for Fanning Corporation follows: $ 242,000 758,000 Current assets Long-term assets (net) Total assets $1,000,000 Current liabilities 144,000 453,000 597,000 403,000 Long-term liabilities Total liabilities Common stock and retained earnings Total liabilities and stockholders' equity $1,000,000 Required Compute the following. (Round ratios to 1 decimal place.) Working capital Current ratio Debt-to-assets ratio %

The balance sheet for Fanning Corporation follows: $ 242,000 758,000 Current assets Long-term assets (net) Total assets $1,000,000 Current liabilities 144,000 453,000 597,000 403,000 Long-term liabilities Total liabilities Common stock and retained earnings Total liabilities and stockholders' equity $1,000,000 Required Compute the following. (Round ratios to 1 decimal place.) Working capital Current ratio Debt-to-assets ratio %

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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### Balance Sheet Analysis for Fanning Corporation Below is the balance sheet summary for Fanning Corporation. This educational overview will help you understand key financial metrics derived from balance sheets. #### Balance Sheet Summary: - **Current Assets**: $242,000 - **Long-Term Assets (Net)**: $758,000 - **Total Assets**: $1,000,000 - **Current Liabilities**: $144,000 - **Long-Term Liabilities**: $453,000 - **Total Liabilities**: $597,000 - **Common Stock and Retained Earnings**: $403,000 - **Total Liabilities and Stockholders' Equity**: $1,000,000 #### Required Calculations: The following financial metrics need to be calculated. Ensure all ratios are rounded to one decimal place. 1. **Working Capital**: This is calculated by subtracting current liabilities from current assets. It measures the company’s efficiency and short-term financial health. 2. **Current Ratio**: The current ratio is calculated by dividing current assets by current liabilities. It indicates the company’s ability to pay its short-term obligations with short-term assets. 3. **Debt-to-Assets Ratio**: This ratio is determined by dividing total liabilities by total assets and multiplying by 100 to express it as a percentage. It reflects the proportion of a company’s assets financed by debt. 4. **Debt-to-Equity Ratio**: Compute this ratio by dividing total liabilities by stockholders' equity. It indicates the relative proportions of debt and equity financing. Understanding these components and calculations will provide a comprehensive picture of Fanning Corporation's financial health.
Transcribed Image Text:### Balance Sheet Analysis for Fanning Corporation Below is the balance sheet summary for Fanning Corporation. This educational overview will help you understand key financial metrics derived from balance sheets. #### Balance Sheet Summary: - **Current Assets**: $242,000 - **Long-Term Assets (Net)**: $758,000 - **Total Assets**: $1,000,000 - **Current Liabilities**: $144,000 - **Long-Term Liabilities**: $453,000 - **Total Liabilities**: $597,000 - **Common Stock and Retained Earnings**: $403,000 - **Total Liabilities and Stockholders' Equity**: $1,000,000 #### Required Calculations: The following financial metrics need to be calculated. Ensure all ratios are rounded to one decimal place. 1. **Working Capital**: This is calculated by subtracting current liabilities from current assets. It measures the company’s efficiency and short-term financial health. 2. **Current Ratio**: The current ratio is calculated by dividing current assets by current liabilities. It indicates the company’s ability to pay its short-term obligations with short-term assets. 3. **Debt-to-Assets Ratio**: This ratio is determined by dividing total liabilities by total assets and multiplying by 100 to express it as a percentage. It reflects the proportion of a company’s assets financed by debt. 4. **Debt-to-Equity Ratio**: Compute this ratio by dividing total liabilities by stockholders' equity. It indicates the relative proportions of debt and equity financing. Understanding these components and calculations will provide a comprehensive picture of Fanning Corporation's financial health.
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