Reference no: EM131448752
Question: Instructions: Computing Leverage and Liquidity Ratios
Calculate all formulas in a word document showing the actual formulas and premiums used to compute the ratios. (Please do not use excel)
For examples:
Debt to assets ratio = Total liabilities
Total assets
Debt to equity ratio= Total liabilities
Shareholder's equity
Please calculate the following ratios: 1. Assets to equity (%)
2. Total liabilities to assets (%)
3. Total liabilities to equity (%)
4. Long-term debt to equity (%)
5. Times interest earned (X)
6. Times burden covered (X)
7. Current ratio (X)
8. Acid test (X)
Income Statement 2011
Net sales 11,190
Costs of goods sold 9,400
Gross profit 1,790
Expenses:
General, selling and admin expenses 1,019
Net interest expense 100
Earnings before tax 671
Tax 302
Earnings after tax 369
Balance Sheet
Assets
Current assets:
Cash and securities 671
Accounts receivable 1343
Inventories 1119
Prepaid expenses 14
Total current assets 3147
Net fixed assets 128
Total assets 3275
Liabilities and Owner's Equity
Current liabilities
Bank loan 50
Accounts payable 1007
Current portion long-term debt 60
Accrued wages 5
Total current liabilities 1122
Long-term debt 960
Common stock 150
Retained earnings 1043
Total liabilities and owner's equity 3275