Maple Trump Winery requested that you determine whether thecompany's ability to pay its current liabilities and long-termdebts improved or deteriorated during 2018.
To answer this question, compute the following ratios for 2018and 2017 :
(a) current ratio, (b) quick ratio, (c) debt ratio, and (d)interest coverage ratio. Round all ratios to two decimal places.Summarize the results of your analysis.
| 2018 | 2017 |
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . | $77,000 | $70,000 |
Short-term investments. . . . . . . . . . . . . . . . . | 15,000 | 2,000 |
Accounts receivable, net. . . . . . . . . . . . . . . . | 185,000 | 94,000 |
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . .. | 420,000 | 300,000 |
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . | 9,000 | 10,000 |
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . .. | 860,000 | 520,000 |
Total current liabilities. . . . . . . . . . . . . . . . . .. | 170,000 | 245,000 |
Long-term note payable. . . . . . . . . . . . . . . . . | 190,000 | 280,000 |
Income from operations. . . . . . . . . . . . . . . . . | 120,000 | 106,000 |
Interest expense. . . . . . . . . . . . . . . . . . . . . .. | 20,000 | 33,000 |
To answer this? question, compute the following ratios for 2018and 2017?:
?(a) current? ratio, (b) quick? ratio, (c) debt? ratio, and? (d)interest-coverage ratio. Round all ratios to two decimal places.?(Abbreviations used: Avg? = Average, EBIT? = Earnings beforeinterest and? taxes, LT? = Long-term, and ST? = Short-term.)
Begin with a. current ratio.
Select the formula and then enter the amounts to calculate thecurrent ratios.
