Return on assets: The return on assets is the ratio which indicates the income produced by investment in assets during the financial period. The business entity uses this ratio to calculate the assets that are producing the most return. Debt ratio: The debt ratio is the financial ratio of a company’s loan capital (debt) to the value of its ordinary share (equity). In this ratio, a lower ratio is more favorable than a higher ratio. Current ratio : The current ratio is the financial ratio of current assets over current liabilities. With the help of this ratio, the company can determine its ability to pay off its liabilities with their assets. It shows how easily a company can come up with the money to pay its debts. To calculate: To calculate the return on assets, debt ratio and current ratio.

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Chapter 4, Problem 2.8CP

To determine

Introduction:

Return on assets: The return on assets is the ratio which indicates the income produced by investment in assets during the financial period. The business entity uses this ratio to calculate the assets that are producing the most return.

Debt ratio: The debt ratio is the financial ratio of a company’s loan capital (debt) to the value of its ordinary share (equity). In this ratio, a lower ratio is more favorable than a higher ratio.

Current ratio: The current ratio is the financial ratio of current assets over current liabilities. With the help of this ratio, the company can determine its ability to pay off its liabilities with their assets. It shows how easily a company can come up with the money to pay its debts.

To calculate: To calculate the return on assets, debt ratio and current ratio.

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