Answer:
A) See attached file for Balance Sheet
B) Current ratio = 1.26
C) Debt to Asset ratio = 18%
The Current ratio tells us that the company has 1.26 dollars of current assets to cover 1 dollar of current debt. That is a good thing, but to know if it´s enough covers, further information is needed. Others ratios can help to complete the picture as for example, quick ratio, assets turn over, inventory turn over, receivables turn over, etc. The debt to assets ratio. Tells us that the company owes 18% of its assets. The rest belongs to the stockholders. Again, it´s a good thing, but further information can help us to know if the company can invest in new projects, financing it with debt in a profitable way, for example, if Return on Assets is higher than debt rate.
Explanation:
B) Current ratio = Current Assets / Current Liabilities
Current ratio = 52,140 / 41,400
Current ratio = 1.26
C)Debt to Asset ratio = (Total Liabilities / Total Assets)*100
Debt to Asset ratio = (121,400 / 691,400)*100
Debt to Asset ratio = 18%
The current ratio measures a company's ability to pay short-term obligations or those due within one year, by relating current assets with current liabilities (liquidity ratio). The debt to total assets ratio shows the percentage of a company's total assets that were financed by creditors (financial ratio).
