Question

what is the current ratio for ABC?

courses/ 35017 1/ct/outline Question Completion Status: Use the following ABC Company Balance Sheet for questions 5-7 S 3,000 Cash 5,000 Accounts Payble Accounts Receivable Short term notes 2,000 1,000 1,000 4,000 Current portion of LTD Inventory 12,000 1,000 Other Other S 7,000 22,000 Total Current Liabilities Total Current Assets Long Term Debt 14,000 PP&E 15,000 S 21,000 Total Liabilities Accumulated Depreciation 2,000 13,000 PP&E, net Common Stock 6,000 14.000 Retained Earnings Total Stockholder's Equity 20,000 6,000 Goodwill Total Liabilities and Equity S 41,000 41,000 Total Assets What is the Current Ratio for ABC? 1.0:1 1.43:1 Click Save and Submit to save and submit. Click Save All Answers to save all ansuers Save and Save All Answers PP

Answer 1

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $22,000 / $7,000
Current Ratio = 3.14 : 1

Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
Acid Test Ratio = ($22,000 - $12,000) / $7,000
Acid Test Ratio = 1.43 : 1

Common Size Entry for Inventory = Inventory / Total Assets
Common Size Entry for Inventory = $12,000 / $41,000
Common Size Entry for Inventory = 29.3%

Debt to Total Assets Ratio = Total Liabilities / Total Assets
Debt to Total Assets Ratio = $21,000 / $41,000
Debt to Total Assets Ratio = 51.2%