The balance sheets for Plasma Screens Corporation and additional information are provided below. PLASMA SCREENS CORPORATION
Balance Sheets
December 31, 2021 and 2020
2021 2020
Assets $ 177,600 $ 66,000
Current assets: 89,000 3,400
Cash 114,000 86,000
Accounts receivable 74,000 1.400
Inventory 420,000 730.000
Investments (368,000). $1,118,000
Long-term assets: 420.000 610,000
Land (208,000) $1,097,400
Equipment $ $ 93,000 $ 5,000
Less: Accumulated depreciation 7.000 79,000
Total assets 11,400 4,400
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 110,000 220,000
Interest payable 640,000 263,000
Income tax payable $1,118,000 640,000
Long-term liabilities:
Notes payable 110,000 220,000
Stockholders' equity:
Common stock 640,000 640,000
Retained earnings 263,000 142,600
Total liabilities and stockholders' equity 142,600 $1,097,400
Additional information for Year 2:
Net income is $120,400.
Sales on account are $1,314,800.
Cost of goods sold is $1,035,050.
Required: 1. Calculate the following risk ratios for Year 2:
Risk Ratios
a. Receivables turnover ratio
b. Inventory turnover ratio
c. Current ratio
d. Acid-test ratio
e. Debt to equity ratio
2. When we compare two companies, can one have a higher current ratio while the other has a higher acid-test ratio?
a. Yes
b. NO