Question

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019.

BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019
		2018			2019				2018			2019
Assets							Liabilities and Owners’ Equity
Current assets							Current liabilities
Cash	$	34,678		$	44,680		Accounts payable	$	192,922		$	200,611
Accounts receivable		59,281			79,639		Notes payable		88,020			139,588
Inventory		130,795			197,317
							Total	$	280,942		$	340,199
Total	$	224,754		$	321,636
							Long-term debt	$	243,000		$	179,750
							Owners’ equity
							Common stock and paid-in surplus	$	212,000		$	212,000
							Accumulated retained earnings		146,359			179,065
Fixed assets
Net plant and equipment	$	657,547		$	589,378		Total	$	358,359		$	391,065
Total assets	$	882,301		$	911,014		Total liabilities and owners’ equity	$	882,301		$	911,014

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.)
b.	Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c.	Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
d.	Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
e.	Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

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Answer 1

	2018			2019
	Calculation	Answer		Calculation	Answer
a. Current ratio [ Total current assets / Total current liabilities ]	(224754/280942)	0.80	times	(321636/340199)	0.95	times
b. Quick ratio [ ( Total current assets - Inventory ) / Total current liabilities ]	(224754-130795)/280942	0.33	times	(321636-197317)/340199	0.37	times
c. Cash ratio [ Cash / Current liabilities ]	34678/280942	0.12	times	44680/340199	0.13	times
d. Debt equity ratio [ Total debt / Total owner's equity ]	(523942/358359)	1.46	times	(519949/391065)	1.33	times
d. equity multiplier [ Total assets / Total owner's equity ]	(882301/358359)	2.46	times	(911014/391065)	2.33	times
e. Total debt ratio [ Total debt / Total assets ]	(523942/882301)	0.59	times	(519949/911014)	0.57	times

Working note 2.
	2018	2019
Total current liabilities	280942	340199
Long term debt	243000	179750
Total debt	523942	519949