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3 years ago

Just Dew It Corporation reports the following balance sheet information for 2017 and 2018.

Business

2 answers:

KIM [24]3 years ago

5 0

Answer:

a. Current ratio for 2017 - 1.14

Current ratio for 2018 - 1.38

b. Quick ratio for 2017 - 0.30

Quick ratio for 2018 - 0.41

c. Cash ratio for 2017 - 0.09

Cash ratio for 2018 - 0.11

d. NWC to Total Assets 2017 - 0.03

NWC to Total Assets 2018 - 0.07

e. Debt equity ratio 2017 - 0,49 and equity multiplier 1,49

Debt equity ratio 2018 - 0.36 and equity multiplier 1.36

f. Total Debt ratio 2017 0.33 and long term debt ratio 0.10

Total Debt ratio 2018 0.27 and long term debt ratio 0.08

Explanation:

Current ratio is calculated by dividing the current assets by the current liabilities

2017 2018

$ $

Current assets 84,000 105.800

Current Liabilities 73,440 76.600

Current ratio

2017 - 84,000/ 73,440 1.14

2018 105,800 / 76,600 1.38

Quick ratio is calculated by excluding the inventory balances from the current assets.

Current assets excl. inventory 22,220 31,200

Current Liabilities 73,440 76.600

Quick Ratio

2017 22,220/73,440 0.30

2018 31,200/76,600 0.41

Cash ratio is calculated by only considering cash and cash equivalents and dividing by the current liabilities

Cash balances 6,500 8.600

Current Liabilities 73,440 76.600

Cash ratio

2017 - 6,500/ 73,440 0.09

2018 8,600 / 76,600 0.11

NWC to Total assets is calculated by dividing the net working capital to the total assets of the company

Current assets 84,000 105.800

Current Liabilities 73,440 76.600

Net working capital 10.560 29,200

Total assets 320,000 400,000

NWC to Total assets Ratio

2017 - 10,560/320,000 0.03

2018 - 29,200/400,000 0.07

Debt equity ratio is calculated by dividing the total liabilities of the company with its total equity

Current Liabilities 73,440 76,600

Long Term Liabilities 32,000 30,000

Total debt of the company 105,440 106,600

Common stock 40,000 40,000

Retained Earnings 174,560 253,400

Total Equity 214,560 293,400

Debt Equity ratio

2017 - 105,440/214,560 0,49

2018 - 106,600/293,400 0.36

Equity multiplier is calculated by dividing the total assets over total equity

Total assets 320,000 400,000

Total Equity 214,560 293,400

Equity multiplier

2017 - 320,000/214,560 1.49

2018 - 400,000/293,400 1.36

Total debt ratio is calculated by dividing the total debt with the total assets. The long term debt ratio divides the long term debt with the total assets

Total debt of the company 105,440 106,600

Total assets 320,000 400,000

The total debt ratio

2017 - 105,440/320,000 0.33

2018 - 106,600/400,000 0.27

Long Term Liabilities 32,000 30,000

Total Equity 214,560 293,400

2017 - 32,000/ 214,560 0.10

2018 - 30,000/ 293,400 0.08

IceJOKER [234]3 years ago

4 0

Answer:

Cash : (2017)= 6560 ; (2018) = 8600

Account Payable: (2017) = 51840 ; (2018) = 53000

Account receivable: (2017) = 16160 ; (2018) = 22600

Notes payable: (2017) = 21600 ; (2018) = 23600

Inventory : (2017) = 61280 ; (2018) = 74600

Long-term debt: (2017)= 32000 ; (2018) = 30000

Owners equity : (2017)= 40000 ; (2018) = 40000

Retained earning: (2017) = 174560 ; (2018) = 253400

Net Plant & equipment: (2017) = 236000 ; (2018) = 294200

Total Assets: (2017) = 320000 ; (2018) = 400000

Total equity and liabilities: (2017) = 320000 ; (2018) = 400000

Current assets = Cash + Account receivable + Inventory

Current liabilities = Accounts payable +Notes payable

As we know that : Current ratio = Current assets / current liabilities.

(2017) = (6560+16160+61280) / (51840+21600)=84000/73440=1.14

(2018) =(8600+22600+74600)/ (53000+23600)=105800/76600=1.38

As we know that : Quick ratio = (Cash + securities + Account receivable)/ Current liabilities.

(2017)=(6560+16160)/73440=22720/73440= 0.30

(2018)= (8600+22600)/76600=31200/76600=0.40

As we know that Cash ratio = cash &cash equivalent / current liabilities

(2017) = 6560 / 73440 = 0.089

(2018) = 8600 / 76600 =0.112

As we know that NWC to total asset ratio = net working capital / Total assets.

Net working capital = current assets - current liabilities.

(2017) NWC=84000-73440=10560

(2018) NWC = 105800-76600=29200

NWC ratio:

(2017) = 10560 /320000= 0.033

(2018)= 29200 /400000= 0.073

As we know that debt to equity ratio = Total liabilities / Total shareholder equity.

Total liabilities (2017)= 51840 + 21600 + 32000 = 105440

Total liabilities (2018)= 53000 + 23600 + 30000 = 106600

Total equity (2017) =40000+174560= 214560

Total equity (2018) = 40000+253400 = 293400

ratio (2017) = 105440/214560=0.49

ratio(2018) =106600/293400=0.36

As we know that total debts ratio = Total debt / Total assets

Total debt (2017) = 51840+21600+32000 =105440

Total debt (2018) = 53000+23600+30000=106600

ratio (2017) =105440/320000=0.32

ratio (2018) =106600/400000=0.26

As we know that long-term debt ratio = long-term debt / total assets

(2017) = 32000/320000=0.1

(2018) =30000/400000=0.075

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