Answer:
a) current ratio of the company is = 3.25
b) debt to assets ratio of the company is = 68%
Explanation:
a) The current ratio measures a company's ability to pay debts till 12 months long. The formula is calculated by dividing the current assets over the current debts.
current assets
Cash and cash equivalents $15,600
+
Accounts receivable $37,000
+
Prepaid insurance $11,460
+
Inventory $80,000
------------------------------------------------------
current assets $144,060
current debts
Accounts payable $28,000
+
Salaries and wages payable $12,600
+
Interest payable $3,700
-------------------------------------------------------
Currents debts $44,300
current ratio=$144,060/$44,300=3.25
b) The debt to total assets ratio indicates the percentage of a company's total assets that were financed by creditors. For its calculation it is necessary to divide all the debts or liabilities by all the assets.
total assets
current assets $144,060
+
non currents assets
Goodwill $131,000
+
Property, plant, and equipment 530,000
-
Accumulated depreciation 106,000
---------------------------------
assets $699,060
Total debts or liabilities
current liabilities $44,300
+
non current liabilities
Notes payable (due 2027) $103,000
Notes payable (due 2023) $14,500
Bonds payable $315,000
------------------------------------
debts $476,800
debt to total assets ratio = $476,800/$699,060=0,68 or 68%
