Just Dew It Corporation reports the following balance sheet information for 2011 and 2012.

Just Dew It Corporation reports the following balance sheet information for 2011 and 2012.  

JUST DEW IT CORPORATION 2011 and 2012 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2011				2012					2011				2012
Current assets									Current liabilities
Cash	$	6,600			$	12,750			Accounts payable	$	50,000			$	68,750
Accounts receivable		12,200				14,250			Notes payable		19,000				35,500
Inventory		78,200				95,250
Total	$	97,000			$	122,250			Total	$	69,000			$	104,250
									Long-term debt	$	48,000			$	45,000
									Owners’ equity
									Common stock and paid-in surplus	$	50,000			$	50,000
									Retained earnings		233,000				300,750
Net plant and equipment	$	303,000			$	377,750			Total	$	283,000			$	350,750
Total assets	$	400,000			$	500,000			Total liabilities and owners’ equity	$	400,000			$	500,000

  

Based on the balance sheets given for Just Dew It:

   

a.	Calculate the current ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

    

	2011	2012
Current ratio	times	times

   

b.	Calculate the quick ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

    

	2011	2012
Quick ratio	times	times

  

c.	Calculate the cash ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

    

	2011	2012
Cash ratio	times	times

  

d.	Calculate the NWC to total assets ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

     

	2011	2012
NWC ratio	%	%

  

e.	Calculate the debt–equity ratio and equity multiplier for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

  

	2011	2012
Debt-equity ratio	times	times
Equity multiplier

    

f.	Calculate the total debt ratio and long-term debt ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))

  

	2011	2012
Total debt ratio	times	times
Long-term debt ratio	times	times

Explanation:  a.

Current ratio	=	Current assets / Current liabilities
Current ratio 2011	=	$97,000 / $69,000 = 1.41 times
Current ratio 2012	=	$122,250 / $104,250 = 1.17 times

 
b.

Quick ratio	=	(Current assets – Inventory) / Current liabilities
Quick ratio 2011	=	($97,000 − 78,200) / $69,000 = 0.27 times
Quick ratio 2012	=	($122,250 − 95,250) / $104,250 = 0.26 times

 
c.  

Cash ratio	=	Cash / Current liabilities
Cash ratio 2011	=	$6,600 / $69,000 = 0.10 times
Cash ratio 2012	=	$12,750 / $104,250 = 0.12 times

 
d.

NWC ratio	=	NWC / Total assets
NWC ratio 2011	=	($97,000 – 69,000) / $400,000 = 7.00%
NWC ratio 2012	=	($122,250 − 104,250) / $500,000 = 3.60%

 
e.

Debt-equity ratio	=	Total debt / Total equity
Debt-equity ratio 2011	=	($69,000 + 48,000) / $283,000 = 0.41 times
Debt-equity ratio 2012	=	($104,250 + 45,000) / $350,750 = 0.43 times

    

Equity multiplier	=	1 + D/E
Equity multiplier 2011	=	1 + 0.41 = 1.41
Equity multiplier 2012	=	1 + 0.43 = 1.43

 
f. 

Total debt ratio	=	(Total assets – Total equity) / Total assets
Total debt ratio 2011	=	($400,000 − 283,000) / $400,000 = 0.29 times
Total debt ratio 2012	=	($500,000 − 350,750) / $500,000 = 0.30 times

  

Long-term debt ratio	=	Long-term debt / (Long-term debt + Total equity)
Long-term debt ratio 2011	=	$48,000 / ($48,000 + 283,000) = 0.15 times
Long-term debt ratio 2012	=	$45,000 / ($45,000 + 350,750) = 0.11 times