Business, 18.01.2021 14:00 guzmangisselle

Sprague Company has been operating for several years, and on December 31, 207, presented the following balance sheet. SPRAGUE COMPANY BALANCE SHEET DECEMBER 31, 2014
Cash $40,000
Accounts payable $80,000
Receivables 75000
Mortgage payable 140,200
Inventory 95000
Common stock ($1 par) 150,000
Plant assets (net) 220,000
Retained earnings 60,000 430000
The net income for 2017 was $25,000. Assume that total assets are the same in 2016 and 2017.
Compute each of the following ratios. for each of the four, indicate the manner in which it is computed and its significance as tool in the analysis of the financial soundness of the company
a) Current ratio
b) Acid-test ratio
c) Debt to assets ratio
d) Return on asset

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Answer from: esme72

A. Current Ratio= 2.63

B. Acid-Test Ratio= 1.44

C. Debt to Assets Ratio51.16%

D. Return on assets5.81%

Explanation:

a. Calculation fornCurrent Ratio

First step is to Calculate the Total Current Assets

Cash 40,000

Receivables 75,000

Inventory 95,000

Total Current Assets 210,000

Now let calculate Current Ratio

Current Ratio=Current Assets / Current Liabilities

Current Ratio=210,000/80,000

Current Ratio= 2.63

b Calculation for Acid-Test Ratio

Acid-Test Ratio=(Current Assets - Inventory) / Current Liabilities

Acid-Test Ratio=(210,000-95,000)/80,000

Acid-Test Ratio=115,000/80,000

Acid-Test Ratio = 1.44

c. Calculation forDebt to Assets Ratio

First step is to calculate total Debt

Accounts payable 80,000

Mortgage payable 140,000

Total Debt 220,000

Now let calculate the Debt to Assets Ratio

Debt to Assets Ratio=Total Debt/ Total Assets

Debt to Assets Ratio=220,000/430,000

Debt to Assets Ratio=51.16%

d. Calculation forReturn on assets

Return on assets=Net Income/ Average Assets

Return on assets=25,000/430,000

Return on assets5.81%

Answer from: Quest

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Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

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Sprague Company has been operating for several years, and on December 31, 207, presented the followi...

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