Financial statement data of Trinton Engineering include the following items:
Data Table:
cash $30,000
short-term investments 36,000
accounts receivables, net 86,000
Inventories 148,000
prepaid expenses 7,000
total assets 678,000
short-term notes payable 46,000
account payable 105,000
accrued liabilities 35,000
long-term notes payable 166,000
other long-term liabilities 31,000
net income 98,000
number of common shares outstanding 51,000
Requirements:
1. Compute Trinton's current ratio, debt ration and earnings per share. (Round all ratios to two decimals places).
2.Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Borrowed $120,000 on a long-term note payable.
b. Issued 20,000 shares of common stock, receiving cash of $367,000.
c. Paid short-term notes payable $24,000.
d. Purchased merchandise of $44,000 on account, debiting inventory.
e. Received cash on account, $15,000.
Formulas
current ratio: current assets / current liabilities
debt ratio: total liabilities / total assets
earnings per share: net income / common shares outstanding.