Question

A rumor of​ "right sizing" at​ Ojai's engineering firm has him and his​ wife, Kaya, concerned about their preparation for meeting financial emergencies. Help them calculate their net worth or complete Worksheet​ 4, and calculate and interpret the current​ ratio, given the following assets and​ liabilities:Checking account ………………… $2,000
Savings account ………………….. $4,000
Stocks ……………………………. $8,000
Utility bills ………………………. $500
Credit card bills …………………. $1,000
Auto loan ……………………….. $2,600

Answer 1

Answer:

Explanation:

Net assets = Total assets - Total debt

We know:

Checking account ………………… $2,000

Savings account ………………….. $4,000

Stocks ……………………………. $8,000

Utility bills ………………………. $500

Credit card bills …………………. $1,000

Auto loan ……………………….. $2,600

Let's classify them as asset or liability:

Assets: Checking account, Stocks, Savings account = 2000+4000+8000=14000

Liability: Utility bills, Credit card bills, Auto loan = 500+1000+2600=4100

So, net worth is 14000-4100=9900

Current ratio = Monetary assets/ Current liabilities;

Monetary assets = 2000+4000 = 6000

Current liabilities = 1000 + 500 = 1500

Current ratio = 6000/1500 = 4