Question

Consider this simplified balance sheet for geomorph trading: current assets $ 180 current liabilities $ 100 long-term assets 580 long-term debt 240 other liabilities 150 equity 270 $ 760 $ 760
a. what is the company's debt-equity ratio? (round your answer to 2 decimal places.) debt-equity ratio
b. what is the ratio of long-term debt to total long-term capital? (round your answer to 2 decimal places.) long-term debt ratio
c. what is its net working capital? net working capital $
d. what is its current ratio? (round your answer to 2 decimal places.) current ratio

Answer 1

a. Debt to equity ratio = Total debt / total equity

Total debt (other than current) = 240 + 150= 390

Total equity = 270

Debt to equity = 390/270 = 1.44

b. Long term debt = 240

Equity (long term) =270

Long term capital = 240 + 270 = 510

Long term debt to long term capital = 240/510 = 0.4706 = 47.06%

c. Working capital = current assets - current liabilities = 180-100 = $80

d. Current ratio = Current assets/ current liabilities = 180/100 = 1.8