Asked by cristian sanchez on May 22, 2024
Verified
The following data were reported by Universe Company at year-end:
Calculate each of the following ratios:
A.Debt-to-equity
B.Current ratio
C.Quick ratio
D.Which of the above ratios,if any,are liquidity ratios?
E.Which of the above ratios,if any,are profitability ratios?
Liquidity Ratios
Financial metrics used to assess a firm's ability to meet its short-term obligations, with common examples including the current ratio and quick ratio.
Profitability Ratios
Ratios that compare income with one or more primary activities.
- Assess the effect of specific transactions on financial ratios and a business's financial situation.
- Examine companies' financial outcomes by evaluating ratios pertinent to profit-making capability, fluidity in assets, and long-term viability.
Verified Answer
AA
Angelo ArmijoMay 25, 2024
Final Answer :
A.Debt-to-equity = ($75,000 + $75,000)÷ $375,000 = .40 or 40%.
B.Current ratio = $150,000 ÷ $75,000 = 2.Current assets = Total assets - noncurrent assets = $525,000 - $375,000 = $150,000.
C.Quick ratio = $105,000 ÷ $75,000 = 1.4
D.Current ratio and quick ratio.
E.None of the ratios listed are profitability ratios.
B.Current ratio = $150,000 ÷ $75,000 = 2.Current assets = Total assets - noncurrent assets = $525,000 - $375,000 = $150,000.
C.Quick ratio = $105,000 ÷ $75,000 = 1.4
D.Current ratio and quick ratio.
E.None of the ratios listed are profitability ratios.
Learning Objectives
- Assess the effect of specific transactions on financial ratios and a business's financial situation.
- Examine companies' financial outcomes by evaluating ratios pertinent to profit-making capability, fluidity in assets, and long-term viability.
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