Answer:
HALLBROOK INDUSTRIES, INC.
1. Current Ratio = Current assets/Current liabilities
= $1,300/530
= 2.45
2. Acid-test ratio = (Current assets - Inventory)/Current liabilities
= $940/530
= 1.77
3. Debt to Equity ratio = Total Liabilities/Equity
= $1,010/$2,590 * 100
= 0.39
4. Times Interest Earned = EBIT/Interest Expense
= $460/$50
= 9.2 times
Explanation:
a) Data and Calculations:
HALLBROOK INDUSTRIES, INC.
Balance Sheet December 31, 2021 ($ in thousands)
Assets
Cash $ 330
Short-term investments 280
Accounts receivable 330
Inventory 360
Total current assets $1,300
Property, plant, & equipment (net) 2,300
Total assets $ 3,600
Liabilities and Shareholders’ Equity
Current liabilities $ 530
Long-term liabilities 480
Total liabilities $1,010
Equity
Paid-in capital 1,400
Retained earnings 1,190
Total Equity $2,590
Total liabilities and
shareholders’ equity $ 3,600
2021 Income Statement reported the following amounts ($ in thousands):
Net sales $ 5,900
Interest expense 50
Income tax expense 120
Net income 290
EBIT = $460
