The following accounting information exists for Aspen and Willow companies. Aspen Willow Cash $ 18,000 $ 28,000 Wages payable 20,500 24,000 Merchandise inventory 25,035 59,600 Building 60,000 120,000 Accounts receivable 33,710 40,625 Long-term notes payable 75,000 130,000 Land 45,000 50,000 Accounts payable 37,000 43,500 Sales revenue 220,000 280,000 Expenses 185,000 235,000 Required a-1. Determine the amount of current assets and current liabilities for each company. a-2. Compute the current ratio for each company. b. Assuming that all assets and liabilities are listed above, compute the debt-to-assets ratios for each company. c-1. Determine which company has the greater financial risk in the short term. c-2. Determine which company has the greater financial risk in the long term
The following accounting information exists for Aspen and Willow companies. Aspen Willow Cash $ 18,000 $ 28,000 Wages payable 20,500 24,000 Merchandise inventory 25,035 59,600 Building 60,000 120,000 Accounts receivable 33,710 40,625 Long-term notes payable 75,000 130,000 Land 45,000 50,000 Accounts payable 37,000 43,500 Sales revenue 220,000 280,000 Expenses 185,000 235,000 Required a-1. Determine the amount of current assets and current liabilities for each company. a-2. Compute the current ratio for each company. b. Assuming that all assets and liabilities are listed above, compute the debt-to-assets ratios for each company. c-1. Determine which company has the greater financial risk in the short term. c-2. Determine which company has the greater financial risk in the long term
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The following accounting information exists for Aspen and Willow companies.
| Aspen | Willow | |
|---|---|---|
| Cash | $ 18,000 | $ 28,000 |
| Wages payable | 20,500 | 24,000 |
| Merchandise inventory | 25,035 | 59,600 |
| Building | 60,000 | 120,000 |
| 33,710 | 40,625 | |
| Long-term notes payable | 75,000 | 130,000 |
| Land | 45,000 | 50,000 |
| Accounts payable | 37,000 | 43,500 |
| Sales revenue | 220,000 | 280,000 |
| Expenses | 185,000 | 235,000 |
Required
a-1. Determine the amount of current assets and current liabilities for each company.
a-2. Compute the
b. Assuming that all assets and liabilities are listed above, compute the debt-to-assets ratios for each company.
c-1. Determine which company has the greater financial risk in the short term.
c-2. Determine which company has the greater financial risk in the long term
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