BALANCE SHEET  Liabilities  Amt  Assets  Amt  Accounts payable  5,000 Machine and equipment  15,000  Long term debt  8,700 Cash on hand  1,500 Current portion of long term debts  1,700 Merchandise inventory  12,400 Accrued interest payable  1,400 Buildings and improvements  20,000 Mortgage payable  14,500  Accounts receivables  6,200 Capital  74,500 Land  50,000      Prepaid expenses  700            105,800   105,800          Compute for and interpret the following: a. Current ratio b. Working capital c. Acid-test ratio d. Net capital ratio e. Networth ratio f. Debt/Asset ratio g. Debt/Equity ratio 3. What can you say about the short-run and long-run financial conditions of Farm A? 4. What do you think is the main limitation of the given information? Can you effectively analyze both the short-run and long-run positions of Farm A? Why or why not?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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 BALANCE SHEET 

Liabilities  Amt  Assets  Amt 
Accounts payable  5,000 Machine and equipment  15,000 
Long term debt  8,700 Cash on hand  1,500
Current portion of long term debts  1,700 Merchandise inventory  12,400
Accrued interest payable  1,400 Buildings and improvements  20,000
Mortgage payable  14,500  Accounts receivables  6,200
Capital  74,500 Land  50,000 
    Prepaid expenses  700 
       
  105,800   105,800
       

 Compute for and interpret the following:
a. Current ratio
b. Working capital
c. Acid-test ratio
d. Net capital ratio
e. Networth ratio
f. Debt/Asset ratio
g. Debt/Equity ratio
3. What can you say about the short-run and long-run financial conditions of Farm A?
4. What do you think is the main limitation of the given information? Can you effectively analyze both the short-run and long-run positions of Farm A? Why or why not?

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