Analyze the ability to pay liabilities
Response to the following problem:
NY Furniture Company has requested that you determine whether the company's ability to pay its current liabilities and longterm debts improved or deteriorated during 2014. To answer this question, compute the following ratios for 2014 and 2013. Round your answers to two decimal places.
a. Working capital
b. Current ratio
c. Quick (acid-test) ratio
d. Debt ratio
e. Times-interest-earned ratio
|
|
2014
|
2013
|
|
Cash ..........................................
|
$ 42,000
|
$48,000
|
|
Short-term investments...............
|
31,000
|
6,000
|
|
Net receivables............................
|
118,000
|
125,000
|
|
Inventory....................................
|
235,000
|
261,000
|
|
Prepaid expenses..........................
|
15,000
|
5,000
|
|
Total assets.................................
|
572,000
|
534,000
|
|
Total current liabilities.................
|
249,000
|
151,000
|
|
Long-term debt...........................
|
87,000
|
255,000
|
|
Income from operations...............
|
210,000
|
199,000
|
|
Interest expense...........................
|
38,000
|
40,000
|
Summarize the results of your analysis in a short paragraph.