Question

Hermann Company reported these ratios at December 31, 2014 (dollar amounts in millions):
Current ratio = $50 / $40 = 1.25
Debt ratio = $40 / $70 = 0.57
Hermann Company completed these transactions during 2015:
a. Purchased equipment on account, $8
b. Paid long-term debt, $5
c. Collected cash from customers in advance, $7
d. Accrued interest expense, $2
e. Made cash sales, $6
Determine whether each transaction improved or hurt Hermann’s current ratio and debt ratio.



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  • CreatedJuly 25, 2014
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