(Ratio Computations and Discussion) Sprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.
The net income for 2014 was $25,000. Assume that total assets are the same in 2013 and 2014.
Instructions
Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company.
(a) Current ratio. (c) Debt to assets.
(b) Acid-test ratio. (d) Return on assets.