# 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

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#### 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