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    Calculating Ratios from Balance Sheets

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    Use the balance sheets of Sando shown below to calculate the following ratios for 2008 (round to the hundredths):
    (a) Current ratio.
    (b) Acid-test ratio.
    (c) Debt ratio.
    (d) Equity ratio.
    Sando Co. Balance Sheet
    Deceber 31, 2008 and 2007

    Assets:
    Cash.........................................$43,000 $22,000
    Accounts receivable ....................... 38,000 42,000
    Merchandise inventory ............... ...... 61,000 52,000
    Prepaid insurance ........................ 6,000 9,000
    Long-term investments .................... 49,000 20,000
    Plant assets (net) ......................... 218,000 218,000
    Total assets ............................... 415,000 363,000

    Liabilities an Equity
    Current liabilities ...........................$62,000 $75,000
    Long-term liabilities ..........................45,000 36,000
    Common stock .................................150,000 150,000
    Retained earnings .............................158,000 102,000
    Total liabilities and equity ...................415,000 363,000

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    Solution Preview

    2008
    CURRENT RATIO=
    CURRENTASSETS/CURRENT LIABILITIES 148000 2.387
    62000

    (b) Acid-test ratio.

    (Cash +Accounts receivable)/Current ...

    Solution Summary

    Help with balance sheets is achieved.

    $2.19

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