Exercise NO: 17

 \nSprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.\n\n \nThe net income for 2014 wa

 

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Sprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.

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The net income for 2014 was $25,000. Assume that total assets are the same in 2013 and 2014.

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Instructions

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Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company.

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(a) Current ratio. (c) Debt to assets.

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(b) Acid-test ratio. (d) Return on assets.

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