Ability to pay its current liabilities and total liabilities

Assignment Help Financial Accounting

Reference no: EM13790060

Large Land Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2015.

To answer this question, you gather the following data:

2015 2014

Cash

58,000 57,000

Short-term Investments

$31,000 0

Net Accounts Receivables

110,000 132,000

Merchandise Inventory

247,000 297,000

Total Assets

585,000 535,000

Total Current Liabilities

255,000 222,000

Long-term Note Payable

46,000 48,000

Income From Operations 180,000 153,000

180,000 153,000

Interest Expense

52,000 39,000

Compute the following ratios for 2015 and 2014, and evaluate the company’s ability to pay its current liabilities and total liabilities:

a. Current ratio

b. Cash Ratio

c. Acid-test ratio

d. Debt ratio 2015 0.51

e. Debt to equity ratio

Reference no: EM13790060

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