Respuesta :
Answer:
See answers below
Explanation:
1. Compute current ratio
Current ratio(2016) = Current assets / Current liabilities
= $6,594,351 / $5,827,005
= 1.13:1
Current ratio(2017) = Current assets / Current liabilities
= $6,905,075 / $7,674,670
= 0.89:1
Compute quick ratio
Quick ratio (2016) = Cash + Net receivables / Current liabilities
= $3,726,549 + $499,142 / $5,827,005
= $4225691 / $5827005
= 0.72:1
Quick ratio (2017) = Cash + Net receivables / Current liabilities
= $3,701,247 + $515,381 / $7,674,670
= $6,905,075 / $7,674,670
= 0.55:1
b. Compute debt to equity ratio
Debt to equity (2016) = Total liabilities / Stockholder's equity
= $16,750,167 / $6,247,242
= 2.68:1
Debt to equity (2017) = Total liabilities / Stockholder's equity
= $23,022,980 / $5,965,725
= 3.86:1
Compute times interest earned ratio
Times interest ratio(2017) = Earning before interest and income tax / Interest expense
• Please note that in 2017, loss before income taxes ($2,209,032) , hence no ratio is computed
c. Compute the cash burn rate for 2017.
Cash burn rate (2017) = Opening cash balance - Closing cash balance / Months
= $3,726,549 - $3,701,247 / 12
= $2,108