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2020 2019 Name of Ratio Calculation Ratio Calculation Ratio 1 Current ratio 39271 ÷ 48839 0.80 21760 ÷ 37930 0.57 2 Debt to total assets 54839 ÷ 116071 47.20% 37,930 ÷ 88160 43% 3 Gross profit rate 262931 ÷ 254375 54.10% 254375 ÷ 462500 55.00% 4 Profit margin 37002 ÷ 485625 7.60% 42000 ÷ 462500 9.10% 5 Return on assets 37002...

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Accounting

20202019
Name of RatioCalculationRatioCalculationRatio
1Currentratio39271 ÷488390.8021760 ÷379300.57
2Debt tototal assets54839 ÷11607147.20%37,930 ÷8816043%
3Grossprofit rate262931 ÷25437554.10%254375 ÷46250055.00%
4Profitmargin37002 ÷4856257.60%42000 ÷4625009.10%
5Returnon assets37002 ÷10211636.2%42000 ÷6067069.2%
6Returnon common stockholders' equity(37002 -18000) ÷ 5573134.1%(42000 -16800) ÷ 3670568.7%

(a) Comment your finds from the above ratios.

(b) What impact would borrowing an additional $20,000 to buymore equipment have on each of the ratios in (a) above, assumingthat no changes are expected on the income statement and balancesheet? Comment on your findings.

Answer & Explanation Solved by verified expert
3.9 Ratings (667 Votes)
1 Current ratio is a measure of liquidity The bigger the current ratio the larger is the amount of rupees available per rupee of current liability the more is the firms ability to meet current obligation and the greater is the safety of funds of short term creditors conventionally a current ratio of 21 current assets twice current liabilities is considered satisfactory although there is no    See Answer
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