If a company has current assets of R10 000, fixed assets of R30 000, current liabilities of R2 000 and long term liabilities of R5 000, what would the company's debt ratio be? Also comment on whether you think it is a good ratio if the average debt ratio in the industry is 25%

7.2 Marlin Ltd. had current liabilities of R20 000 in 2020 and current assets of R30 000. In 2021 however, the company had current liabilities of R28 000 and current assets of R29 000.

Required:

Calculate the current ratio for Marlin Ltd. for both 2020 and 2021 and comment on the change in the ratio between 2020 and 2021 and what it means for the company's solvency.

Answer rating: 100% (QA)

To calculate the debt ratio for the first company you need to divide the total liabilities by the to... View the full answer