Share
Explore BrainMass

Calculating Ratios from Balance Sheets

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

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