Question

The 2018 balance sheet for Hallbrook Industries, Inc., is shown below. HALLBROOK INDUSTRIES, INC. Balance Sheet...

The 2018 balance sheet for Hallbrook Industries, Inc., is shown below.

HALLBROOK INDUSTRIES, INC.
Balance Sheet
December 31, 2018
($ in 000s)
Assets
Cash $ 370
Short-term investments 320
Accounts receivable 370
Inventories 340
Property, plant, and equipment (net) 2,700
Total assets $ 4,100
Liabilities and Shareholders’ Equity
Current liabilities $ 570
Long-term liabilities 520
Paid-in capital 1,600
Retained earnings 1,410
Total liabilities and shareholders’ equity $ 4,100


The company’s 2018 income statement reported the following amounts ($ in 000s):

Net sales $ 6,300
Interest expense 50
Income tax expense 160
Net income 330


Required:
1. Calculate the current ratio. (Round your answer to 2 decimal places.)
2. Calculate the acid-test ratio. (Round your answer to 3 decimal places.)
3. Calculate the debt to equity ratio. (Round your answer to 2 decimal places.)
4. Calculate the times interest earned ratio. (Round your answer to 1 decimal place.)

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Homework Answers

Answer #1
1
Cash 370
Short-term investments 320
Accounts receivable 370
Inventories 340
Total Current Assets 1400
Divide by Current liabilities 570
Current ratio 2.46
2
Cash 370
Short-term investments 320
Accounts receivable 370
Total Quick Assets 1060
Divide by Current liabilities 570
Acid-test ratio 1.860
3
Total Debt 1090 =570+520
Divide by Total Equity 3010 =1600+1410
Debt to equity ratio 0.36
4
Net income before interest and tax 540 =330+50+160
Divide by Interest expense 50
Times interest earned ratio 10.8 times
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