Bethesda Mining Company reports the following balance sheet information for 2009 and 2010.

Bethesda Mining Company reports the following balance sheet information for 2009 and 2010.  

BETHESDA MINING COMPANY Balance Sheets as of December 31, 2009 and 2010
		2009			2010				2009			2010
Assets							Liabilities and Owners’ Equity
Current assets							Current liabilities
Cash	$	65,470		$	82,487		Accounts payable	$	186,922		$	194,611
Accounts receivable		65,281			85,639		Notes payable		82,020			133,588
Inventory		116,676			181,549
							Total	$	268,942		$	328,199
Total	$	247,427		$	349,675
							Long-term debt		231,000			167,750
							Owners’ equity
							Common stock and paid-in surplus	$	224,000		$	224,000
							Accumulated retained earnings		182,232			219,704
Fixed assets
Net plant and equipment	$	658,747		$	589,978		Total	$	406,232		$	443,704
Total assets	$	906,174		$	939,653		Total liabilities and owners’ equity	$	906,174		$	939,653

 

Required:

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

(a)	Current ratio. (Round your answers to 2 decimal places (e.g., 32.16).)

 

	Current ratio
2009	times
2010	times

 

(b)	Quick ratio. (Round your answers to 2 decimal places (e.g., 32.16).)

 

	Quick ratio
2009	times
2010	times

 

(c)	Cash ratio. (Round your answers to 2 decimal places (e.g., 32.16).)

 

	Cash ratio
2009	times
2010	times

 

(d)	Debt-equity ratio and equity multiplier. (Round your answers to 2 decimal places (e.g., 32.16).)

 

	Debt-equity ratio	Equity multiplier
2009
2010

 

(e)	Total debt ratio. (Round your answers to 2 decimal places (e.g., 32.16).)

 

	Total debt ratio
2009
2010

Explanation:

(a)	The current ratio is calculated as:

 

	Current ratio	=	Current assets / Current liabilities
	Current ratio2009	=	$247,427 / $268,942
	Current ratio2009	=	0.92 times
	Current ratio2010	=	$349,675 / $328,199
	Current ratio2010	=	1.07 times

 

(b)

The quick ratio is calculated as:

 

	Quick ratio	=	(Current assets – Inventory) / Current liabilities
	Quick ratio2009	=	($247,427 – 116,676) / $268,942
	Quick ratio2009	=	0.49 times
	Quick ratio2010	=	($349,675 – 181,549) / $328,199
	Quick ratio2010	=	0.51 times

 

(c)

The cash ratio is calculated as:

 

	Cash ratio	=	Cash / Current liabilities
	Cash ratio2009	=	$65,470 / $268,942
	Cash ratio2009	=	0.24 times
	Cash ratio2010	=	$82,487 / $328,199
	Cash ratio2010	=	0.25 times

 

(d)

The debt-equity ratio is calculated as:

 

	Debt-equity ratio	=	Total debt / Total equity
	Debt-equity ratio	=	(Current liabilities + Long-term debt) / Total equity
	Debt-equity ratio2009	=	($268,942 + 231,000) / $406,232
	Debt-equity ratio2009	=	1.23
	Debt-equity ratio2010	=	($328,199 + 167,750) / $443,704
	Debt-equity ratio2010	=	1.12
	And the equity multiplier is:
	Equity multiplier	=	1 + Debt-equity ratio
	Equity multiplier2009	=	1 + 1.23
	Equity multiplier2009	=	2.23
	Equity multiplier2010	=	1 + 1.12
	Equity multiplier2010	=	2.12

 

(e)

The total debt ratio is calculated as:

 

	Total debt ratio	=	Total debt / Total assets
	Total debt ratio	=	(Current liabilities + Long-term debt) / Total assets
	Total debt ratio2009	=	($268,942 + 231,000) / $906,174
	Total debt ratio2009	=	0.55
	Total debt ratio2010	=	($328,199 + 167,750) / $939,653
	Total debt ratio2010	=	0.53