Based on the following information, compute the (1) current ratio and (2) working capital. Current assets  
- Based on the following information, compute the (1) current ratio and (2) working capital.
Current assets $200,000
Total assets 900,000
Current liabilities 80,000
Total liabilities 500,000
(1) Current Ratio (2) Working Capital
Ranger Corporation reports the following amounts in their 2015 financial statements:
At December 31, 2015 For the Year 2015
Total assets $2,000,000
Total liabilities 1,310,000
Total stockholders’ equity ?
Interest expense $25,000
Income tax expense 130,000
Net income 150,000
Instructions
- Compute the December 31, 2013, balance in stockholders’ equity.
- Compute the debt to assets ratio at December 31, 2015.
- Compute times interest earned for 2015.
Homework Answers
Answer 1 Current Ratio = Current assets / Current liabilities
= $200,000 / $80,000 = 2.5
Answer 2 Working Ratio = Current assets - Current liabilities
= $200,000 - $80,000 = $120,000
Answer a. Stockholders’ equity = Total assets - Total liabilities
= $2,000,000 - $1,310,000 = $690,000
Answer b. Debt to assets ratio = Total liabilities / Total assets
= $1,310,000 / $2,000,000 = 0.655
Answer c. Times interest earned = (Net income +Income tax expense +Interest expense) / Interest expense
= ($150,000 + $130,000 + $25,000) / $25,000 = 12.2 times
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in receivables (based on ending accounts receivables), days’ sales
in
inventory (based on cost of goods and ending inventory), operating
cycle,
total debt to equity ratio and times interest earned. For your
calculations,
assume that a year amounts for 360 days
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