Answer:
Just Dew It Corporation
2017 Ratios:
A 1. Debt-equity ratio = Total debt/Equity = 72%
A 2. Equity multiplier = 58%
B. Total debt ratio = 42%
Long-term debt ratio = 14%
2. 2018 Ratios:
A. Current ratio = 96%
B. Quick ratio = 36%
C. Cash ratio = 9.5%
D. NWC to total assets ratio = -0.89%
E. Debt-equity ratio and equity multiplier:
Debt-equity ratio = 63%
Equity Multiplier = 61%
F. Total debt ratio and long-term debt ratio:
Total debt ratio = 38.5%
Long-term debt ratio = 14%
Explanation:
a) Data and Calculations:
JUST DEW IT CORPORATION
2017 and 2018 Balance Sheets
Assets Liabilities and Owners' Equity
2017 2018
Current assets 2017 2018
Cash $10,150 $10,300
Accounts
receivable 27,700 28,950
Inventory 62,300 64,800
Total current assets $100,150 $104,050
Fixed assets
Net plant and
equipment $325,000 $342,000
Total assets $425,150 $446,050
Current liabilities 2017 2018
Accounts payable $70,250 $61,250
Notes payable 47,250 46,750
Total $117,500 $108,000
Long-term debt $59,900 $63,900
Total liabilities $177,400 $171,900
Owners' equity
Common stock and
paid-in surplus $89,000 $89,000
Retained earnings 158,750 185,150
Total $247,750 $274,150
Total liabilities and
owners' equity $425,150 $446,050
2017 Ratios:
Debt-equity ratio = Total debt/Equity = $177,400/$247,750 = 0.72 or 72%
Equity multiplier = Equity/Assets = $247,750/$425,150 = 58%
B. Total debt ratio = $177,400/$425,150 = 42%
Long-term debt ratio = $59,900/$425,150 = 14%
2. 2018 Ratios:
A. Current ratio = Current assets/current liabilities
= $104,050/$108,000 = 96%
B. Quick ratio = $(104,050-64,800)/$108,000 = 36%
C. Cash ratio = $10,300/$108,000 = 9.5%
D. NWC to total assets ratio = ($104,050-$108,000)/$446,050 = -0.89%
E. Debt-equity ratio and equity multiplier:
Debt-equity ratio = $171,900/$274,150 = 63%
Equity Multiplier = $274,150/$446,050 = 61%
F. Total debt ratio and long-term debt ratio:
Total debt ratio = $171,900/$446,050 = 38.5%
Long-term debt ratio = $63,900/$446,050 = 14%
