Just Dew It Corporation Reports The Following Balance Sheet Information For 2014 And 2015.

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Just Dew It Corporation Reports The Following Balance Sheet Information For 2014 And 2015.

JUST DEW IT CORPORATION 2014 and 2015 Balance Sheets Assets Liabilities and Owners' Equity 2014 2015 2014 2015 Current assets Current liabilities Cash $ 9,000 $ 11,250 Accounts payable $ 70,000 $ 73,250 Accounts receivable 17,000 24,750 Notes payable 23,800 31,000 Inventory 77,000 93,750 Total $ 103,000 $ 129,750 Total $ 93,800 $ 104,250 Long-term debt $ 42,000 $ 40,000 Owners' equity Common stock and paid-in surplus $ 50,000 $ 50,000 Retained earnings 214,200 305,750 Net plant and equipment $ 297,000 $ 370,250 Total $ 264,200 $ 355,750 Total assets $ 400,000 $ 500,000 Total liabilities and owners' equity $ 400,000 $ 500,000 Based on the balance sheets given for Just Dew It: a. Calculate the current ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) 2014 2015 Current ratio 1.10 ± 1% times 1.24 ± 1% times b. Calculate the quick ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) 2014 2015 Quick ratio 0.28 ± .01 times 0.35 ± .01 times c. Calculate the cash ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) 2014 2015 Cash ratio 0.10 ± .01 times 0.11 ± .01 times d. Calculate the NWC to total assets ratio for each year. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 2014 2015 NWC ratio 2.30 ± 1% % 5.10 ± 1% % e. Calculate the debt-equity ratio and equity multiplier for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) 2014 2015 Debt-equity ratio 0.51 ± .01 times 0.41 ± .01 times Equity multiplier 1.51 ± 1% 1.41 ± 1% f. Calculate the total debt ratio and long-term debt ratio for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) 2014 2015 Total debt ratio 0.34 ± .01 times 0.29 ± .01 times Long-term debt ratio 0.14 ± .01 times 0.10 ± .01 times
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a. Current ratio = Current assets / Current liabilities Current ratio 2014 = $103,000 / $93,800 = 1.10 times Current ratio 2015 = $129,750 / $104,250 = 1.24 times b. Quick ratio = (Current assets - Inventory) / Current liabilities Quick ratio 2014 = ($103,000 _ 77,000) / $93,800 = .28 times Quick ratio 2015 = ($129,750 _ 93,750) / $104,250 = .35 times c. Cash ratio = Cash / Current liabilities Cash ratio 2014 = $9,000 / $93,800 = .10 times Cash ratio 2015 = $11,250 / $104,250 = .11 times d. NWC ratio = NWC / Total assets NWC ratio 2014 = ($103,000 - 93,800) / $400,000 = .0230, or 2.30% NWC ratio 2015 = ($129,750 _ 104,250) / $500,000 = .0510, or 5.10% e. Debt-equity ratio = Total debt / Total equity Debt-equity ratio 2014 = ($93,800 + 42,000) / $264,200 = .51 times Debt-equity ratio 2015 = ($104,250 + 40,000) / $355,750 = .41 times Equity multiplier = 1 + D/E Equity multiplier 2014 = 1 + .51 = 1.51 Equity multiplier 2015 = 1 + .41 = 1.41 f. Total debt ratio = (Total assets - Total equity) / Total assets Total debt ratio 2014 = ($400,000 _ 264,200) / $400,000 = .34 times Total debt ratio 2015 = ($500,000 _ 355,750) / $500,000 = .29 times Long-term debt ratio = Long-term debt / (Long-term debt + Total equity) Long-term debt ratio 2014 = $42,000 / ($42,000 + 264,200) = .14 times Long-term debt ratio 2015 = $40,000 / ($40,000 + 355,750) = .10 times
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