Question: Chen Group has been operating for several years, and on December 31, 2019, presented the following statement of financial position (amounts in thousands). The net

Chen Group has been operating for several years, and on December 31, 2019, presented the following statement of financial position (amounts in thousands).

The net income for 2019 was ¥25,000. Assume that total assets are the same in 2018 and 2019.
Instructions
Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company.
a. Current ratio.
b. Acid-test ratio.
c. Debt to assets.
d. Return on assets.

Chen Group Statement of Financial Position December 31, 2019 Plant assets (net) 220,000 Share capital-ordinary 160,000 95,000 Retained earnings Inventory 60,000 Receivables 75,000 Mortgage payable 140,000 Cash 40,000 Accounts payable 70,000 430,000 430,000

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