Question

The condensed financial statements of Ness Company for the years 2016 and 2017 are presented below. NESS COMPANY Balance Sheets December 31 (in thousands) 2017 2016 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 470 400 Inventory 460 390 Prepaid expenses 130 160 Total current assets 1,390 1,310 Property, plant, and equipment (net) 410 380 Investments 10 10 Intangibles and other assets 530 510 Total assets $2,340 $2,210 Current liabilities $820 $790 Long-term liabilities 480 380 Stockholders’ equity—common 1,040 1,040 Total liabilities and stockholders’ equity $2,340 $2,210 Compute the following ratios for 2017 and 2016.

Answer 1

Answer:

Current ratio:  (2017)=1.69;  (2016)=1.65

Quick ratio:   (2017)=1.133 ; (2016)=1.16

Debt ratio:    (2017) =.555   ; (2016)=.529

debts to equity ratio:   (2017)=1.25  ; (2016)=1.125

Explanation:

Current Assets:

Cash and cash equivalents: (2017)=330 ; (2016)=360

Account receivable (net): (2017)=470; (2016)=400

Prepaid expense: (2017)=130; (2016)=160

Inventory: (2017)=460 ; (2016)=390

Total current assets: (2017)= 1390 ; (2016)=1310

Plant property & equipment: (2017)= 410 ; (2016) =380

Investment: (2017) = 10 ; (2016)= 10

Intangible and other assets: (2017)=530 ; (2016)=510

Total Assets: (2017)=2340 ; (2016)=2210

Current liabilities: (2017)=820 ; (2016)=790

Long-term liabilities: (2017)=480 ; (2016)=380

Share holder equity - common: (2017)=1040 ; (2016)= 1040

Total liabilities and shareholder equity: (2017)= 2340 ; (2016)= 2210

Current ratios = Total Current assets/ Total Current liabilities

year (2017)=1390/820=1.69

year (2016)= 1310/790=1.65

Quick ratio =Current assets-inventory/Current liability

year (2017)=(1390-460)/820=1.134

year (2016)=(1310-390)790=1.16

Debt ratio = Total liabilities / total assets  

year (2017)=(820+480)/2340=.5555

year (2016)=(790+380)/2210=.529

Debt to equity ratio = Total liabilities/ Shareholder equity

year (2017)=1300/1040=1.25

year (2016)=1170/1040=1.125