Question

Consider this simplified balance sheet for Geomorph Trading: Current assets $ 245 Current liabilities $ 170...

Consider this simplified balance sheet for Geomorph Trading:

Current assets $ 245 Current liabilities $ 170
Long-term assets 630 Long-term debt 215
Other liabilities 140
Equity 350
$ 875 $ 875

a. What is the company’s debt-equity ratio? (Round your answer to 2 decimal places.)

b. What is the ratio of total long-term debt to total long-term capital? (Round your answer to 2 decimal places.)

c. What is its net working capital?

d. What is its current ratio? (Round your answer to

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Answer #1
a) Debt To Equity Ratio = Total Debt / Total Equity
=525/350
=1.5 times
b) Long term capital = long term debt + equity+other liabilities
=$215+350+140
=$705
Long term debt to long term capital = long term debt / long term capital
=$355/705
50.35%
c) Working Capital = Current Assets - Current Liabilities
= $245-170
= $ 75
d) Current Ratio = Current Assets / Current Liabilities
= $245/170
=1.44 times
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