Question: A recent balance sheet of Sweet Tooth Inc included the

A recent balance sheet of Sweet Tooth, Inc., included the following items, among others. (Dollar amounts are stated in thousands.)
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,625
Marketable securities (short-term) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,926
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,553
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,210
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 5,736
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,477
Notes payable to banks (due within one year) . . . . . . . . . . . . . . . . . . . . . . ..... 20,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,912
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,424
Accrued liabilities (short-term) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,532
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . 6,438

The company also reported total assets of $353,816 thousand, total liabilities of $81,630 thousand, and a return on total assets of 18.1 percent.

Instructions
a. Compute Sweet Tooth’s
(1) Quick assets,
(2) Current assets, and
(3) Current liabilities.
b. Compute Sweet Tooth’s
(1) Quick ratio,
(2) Current ratio,
(3) Working capital, and
(4) Debt ratio. (Round to one decimal place.)
c. Discuss the company’s liquidity from the viewpoints of
(1) Short-term creditors,
(2) Long-term creditors, and
(3) Stockholders.


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  • CreatedApril 17, 2014
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