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Just Dew It Corporation reports the following balance sheet information for 2014 and 2015
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 | $ | 11,250 | $ | 19,440 | Accounts payable | $ | 30,600 | $ | 49,200 | |||||||
| Accounts receivable | 11,850 | 16,080 | Notes payable | 24,900 | 31,200 | |||||||||||
| Inventory | 39,150 | 60,240 | ||||||||||||||
| Total | $ | 62,250 | $ | 95,760 | Total | $ | 55,500 | $ | 80,400 | |||||||
| Long-term debt | $ | 27,000 | $ | 24,000 | ||||||||||||
| Owners’ equity | ||||||||||||||||
| Common stock and paid-in surplus | $ | 48,000 | $ | 48,000 | ||||||||||||
| Retained earnings | 169,500 | 327,600 | ||||||||||||||
| Net plant and equipment | $ | 237,750 | $ | 384,240 | Total | $ | 217,500 | $ | 375,600 | |||||||
| Total assets | $ | 300,000 | $ | 480,000 | Total liabilities and owners’ equity | $ | 300,000 | $ | 480,000 | |||||||
| 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 | times | 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 | times | 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 | times | 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 | % | % |
| 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 | times | times |
| Equity multiplier | ||
| 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 | times | times |
| Long-term debt ratio | times | times |
Expert Solution
| S.No | Ratios | Formula | 2015 | 2014 |
| 1) | Current Ratio | Current Asset/Current Liabilities | 1.191045 | 1.121622 |
| 2) | Quick Ratio | (C.Asset-Inventories)/C. Liabilities | 0.441791 | 0.416216 |
| 3) | Cash Ratio | Cash/Current Liabilities | 0.241791 | 0.202703 |
| 4) | NWC Ratio to Total Assets | (C. Assets-C.Liab)/Total Assets | 0.032 | 0.0225 |
| 5) | Debt-Equity Ratio | Total Liabilities/Total Equity | 0.277955 | 0.37931 |
| 6) | Equity Multiplier | Total Assets/Total Equity | 1.277955 | 1.37931 |
| 7) | Total debt Ratio | Total Debts/Total Assets | 0.2175 | 0.275 |
| 8) | Long term debt ratio | Long tern debt /Total Assets | 0.05 | 0.09 |
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