Question

Bethesda Mining Company reports the following balance sheet information for 2015 and 2016.

BETHESDA MINING COMPANY Balance Sheets as of December 31, 2015 and 2016
	2015				2016					2015				2016
Assets									Liabilities and Owners’ Equity
Current assets									Current liabilities
Cash	$	31,982			$	41,399			Accounts payable	$	193,422			$	201,111
Accounts receivable		58,781				79,139			Notes payable		88,520				140,088
Inventory		131,971				198,632			Total	$	281,942			$	341,199
Total	$	222,734			$	319,170			Long-term debt	$	244,000			$	180,750
									Owners’ equity
									Common stock and paid-in surplus	$	211,000			$	211,000
Fixed assets									Accumulated retained earnings		143,239				175,549
Net plant and equipment	$	657,447			$	589,328			Total	$	354,239			$	386,549
Total assets	$	880,181			$	908,498			Total liabilities and owners’ equity	$	880,181			$	908,498

Based on the balance sheets given for Bethesda Mining, calculate the following financial ratios for each year:

a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Current ratio
2015		times
2016		times

b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Quick ratio
2015		times
2016		times

c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Cash ratio
2015		times
2016		times

d. Debt?equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Debt?equity ratio				Equity multiplier
2015			times				times
2016			times				times

e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Total debt ratio
2015			times
2016			times

Answer 1

a). Current Ratio = Current Assets / Current Liabilities
2015 = 222734 / 281942 = 0.7899 or 0.79 times
2016 = 319170 / 341199 = 0.9354 or 0.93 times

b). Quick Ratio = Quick Assets / Current Liabilities
2015 = (31982 + 58781) / 281942 = 0.32 times
2016 = (41399 + 71139) / 341199 = 0.33 times

c). Cash Ratio = Cash / Current Liabilities
2015 = 31982 / 281942 = 0.11 times
2016 = 41399 / 341199 = 0.12 times

d). Debt to equity ratio = Total Debt / Total Equity
2015 = (244000 +281942) / 354239 = 1.48 times
2016 = (180750 + 341199) / 386549 = 1.35 times

Equity multiplier = Total Assets / Total Equity
2015 = 880181 / 354239 = 2.48 times
2016 = 908498 / 386549 = 2.35 times

e). Total Debt Ratio = Total Debt / Total Assets
2015 = (244000 +281942) / 880181 = 0.5975 or 0.60 times
2016 = (180750 + 341199) / 908498 = 0.5745 or 0.57 times