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Use the following data to answer questions in this part:

Balance sheet data
Assets	20X7	20X6
Cash	$2,900	$1,000
Accounts receivable	2,500	2,000
Inventory	7,400	8,000
Property, plant, equipment	9,200	9,000
Accumulated depreciation	(2,900)	(2,500)
Total assets	$19,100	$17,500
Liabilities and Equity
Accounts payable	$4,700	$4,500
Interest payable	1,500	1,000
Dividends payable	1,000	2,500
Long-term debt	4,350	3,700
Bank note	1,000	800
Common stock	3,300	3,000
Retained earnings	3,250	2,000
Total liabilities and equity	$19,100	$17,500

Income statement for the year 20X7
Sales	$28,500
COGS	19,900
Depreciation	3,700
Interest expense	1,244
Gain on sale of old machine	1,150
Taxes	1,142
Net income	$3,664

Notes:

• Dividends declared to shareholders were $850.

• New common shares were sold at par for $1020.
• Fixed assets were sold for $3500. Original cost of these assets was $2000, and $350 of accumulated depreciation has been charged to their original cost.
• The firm borrowed $200 in a 10-year bank note the proceeds of the loan were used to pay for new fixed assets.
• Depreciation for the year was $3700 (accumulated depreciation up $2900 and depreciation on sold assets $800).

• The company uses the LIFO inventory cost flow method. Had FIFO been used, inventories would have been $1,000 higher in 20X6 and $900 higher in 20X5.
• The effective tax rate for 20X6 was 30%. For all other years, the effective tax rate was 20%.
• At the beginning of 20X8, A firm issues a $10,000 bond with a 6% coupon rate, 4-year maturity, and annual interest payments when market interest rates are 7%.

  Use the following data to answer questions in this part:

  Balance sheet data
  Assets	20X7	20X6
  Cash	$2,900	$1,000
  Accounts receivable	2,500	2,000
  Inventory	7,400	8,000
  Property, plant, equipment	9,200	9,000
  Accumulated depreciation	(2,900)	(2,500)
  Total assets	$19,100	$17,500
  Liabilities and Equity
  Accounts payable	$4,700	$4,500
  Interest payable	1,500	1,000
  Dividends payable	1,000	2,500
  Long-term debt	4,350	3,700
  Bank note	1,000	800
  Common stock	3,300	3,000
  Retained earnings	3,250	2,000
  Total liabilities and equity	$19,100	$17,500

  Income statement for the year 20X7
  Sales	$28,500
  COGS	19,900
  Depreciation	3,700
  Interest expense	1,244
  Gain on sale of old machine	1,150
  Taxes	1,142
  Net income	$3,664

  Notes:

• Dividends declared to shareholders were $850.
• New common shares were sold at par for $1020.
• Fixed assets were sold for $3500. Original cost of these assets was $2000, and $350 of accumulated depreciation has been charged to their original cost.
• The firm borrowed $200 in a 10-year bank note the proceeds of the loan were used to pay for new fixed assets.
• Depreciation for the year was $3700 (accumulated depreciation up $2900 and depreciation on sold assets $800).
• The company uses the LIFO inventory cost flow method. Had FIFO been used, inventories would have been $1,000 higher in 20X6 and $900 higher in 20X5.
• The effective tax rate for 20X6 was 30%. For all other years, the effective tax rate was 20%.
• At the beginning of 20X8, A firm issues a $10,000 bond with a 6% coupon rate, 4-year maturity, and annual interest payments when market interest rates are 7%.
• Calculate the current ratio for 20X6 for both LIFO and FIFO inventory cost flow methods. Consider all payables as current liabilities. Please explain each step of your calculation and interpret your results?

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