Chapter 17, Problem P17.26APGA

To determine

Current Ratio:

The liquidity ratio which measures a company’s ability to pay its short-term liabilities by using the short-term assets of the company is called current ratio. It is computed by dividing the current assets by the current liabilities of the company.

Debt Ratio:

Debt ratio is metric which measures the proportion of borrowed funds in financing the assets of the company. Debt ratio is evaluated by dividing the overall debt of a company by the total asset of the company.

Earnings per Share:

Earnings per share is profitability ratio which measures how much profit is earned for each outstanding share of a company. It is computed by dividing the net income available for common stockholders by the number of outstanding common stock.

To determine:

1. Compute current ratio, debt ratio, and earnings per share of Style Traveler.

2. Compute the three ratios after evaluating the effect of each transaction provided.