Financial statement data of American Traveler Magazine include the following items:

Cash	$ 23,000
Accounts receivable, net	79,000
Inventories	184,000
Total assets	634,000
Accounts payable	104,000
Accrued liabilities	40,000
Short-term notes payable	47,000
Long-term liabilities	221,000
Net income	74,000
Common shares outstanding	60,000

Requirements

1. Compute American Traveler’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places, and use the following format for your answer:

Current Ratio

Debt Ratio

Earnings per Share

2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.

a. Purchased inventory of $49,000 on the account.

b. Borrowed $122,000 on a long-term note payable.

c. Issued 6,000 shares of common stock, receiving cash of $103,000.

d. Received cash on account, $3,000.

Answer rating: 100% (QA)

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