Problem: Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2012. To answer this question, you gather the following data:
| |
2012 |
2011 |
| Cash |
$58,000 |
$57,000 |
| Short-term investments |
31,000 |
- |
| Net receivables |
110,000 |
132,000 |
| Inventory |
247,000 |
297,000 |
| Total assets |
585,000 |
535,000 |
| Total current liabilities |
255,000 |
222,000 |
| Long-term note payable |
46,000 |
48,000 |
| Income from operations |
180,000 |
153,000 |
| Interest expense |
52,000 |
39,000 |
Compute the following ratios for 2012 and 2011:
a. Current ratio
b. Acid-test ratio
c. Debt ratio
d. Debt to equity ratio