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Calculating Ratios for Ames Hardware

Use the following to answer questions 1-4:
Shown below are selected data from the balance sheet of Ames
Hardware, a small retail store (dollar amounts are in thousands):
Cash $20
Accounts receivable 100
Inventory 195
Total assets 450
Current liabilities 150
Non-current liabilities 120
1. Refer to the above data. Ames' debt ratio is:
a. 33%
b. 300%
c. 60%
d. Some other amount
2. Refer to the above data. Working capital amounts to:
a. Minus $30,000
b. $165
c. $180
d. Some other amount
3. Refer to the above data. The current ratio is:
a. 0.48 to 1
b. 0.8 to 1
c. 2.1 to 1
d. Some other amount
4. Refer to the above data. The quick ratio is:
a. 0.133 to 1
b. 0.8 to 1
c. 1.25 to 1
d. Some other amount

An analysis of Clifton Corporation's Investment in Marketable
Securities account during 2000 disclosed the following:
Debit entries $375,000
Credit entries 200,000
Clifton's 2000 income statement included a $20,000 loss on sale of
marketable securities and $15,000 dividend income from marketable
securities. All payments and proceeds relating to marketable
securities transactions were in cash.
5. Refer to the above data. Based solely on the above information,
Clifton's net cash flow from investing activities for 2000 is:
a. $125,000 net cash used by investing activities.
b. $100,000 net cash provided by investing activities.
c. $195,000 net cash used by investing activities.
d. $240,000 net cash provided by investing activities

Solution Preview

1. Given that the total assets are 450, then the total Liab+Owners Equity is also 450. Total liability are 150+120=270, the owners equity is 180. Debt would be non-current liability. The debt ratio is debt/divided by ...

Solution Summary

The solution explains the calculation of some ratios and also the calculation of cash flow from investing activities

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