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Le Gasse Inc. reported this information at December 31: Requirements 1. Using this information, calculate the current

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Le Gasse Inc. reported this information at December 31:
Le Gasse Inc. reported this information at December 31: Requirements 1. Using

Requirements
1. Using this information, calculate the current ratio and the debt ratio for 2014, 2013, and 2012.
2. Explain whether each ratio improved or deteriorated over the three years. In each case, what does your answer indicate?

Transcribed Image Text:

2014 $ 20 50 2013 $ 15 57 2012 3 Current assets Total assets Current liabilities Total liabilities Sales revenue Net income 35 190 175 25 204

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Req1 2014 2013 2012 Current ratio 20 20 15 188 8 133 ...View the full answer


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Related Book For  answer-question
Financial Accounting

Financial Accounting

ISBN: 978-0133472264

5th Canadian edition

Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin

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The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.

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