Problem 9-2:	Show the formulas
Short-term vs. long-term financing
Medina Hardware operates many hardware stores and is planning to expand to other areas.
The firm has historically reinvested earnings and borrowed using short-term borrowing.
Recent financial results are as follows: (All amounts in 000's SAR)
	20X1	20X2	20X3	20X4
Current assets	900	1,200	1,500	1,800
Fixed assets	2,400	2,600	2,800	3,000
Total assets	3,300	3,800	4,300	4,800
Current liabilities	400	800	1,200	1,600
Long-term liabilities	900	900	900	900
Owner's equity	2,000	2,100	2,200	2,300
Total liabilities & equity	3,300	3,800	4,300	4,800
(1) Prepare new balance sheet information assuming current liabilities remain unchanged
at 400 SAR each year and the 400 SAR increase in debt is added to long-term liabilities.
(2) Calculate the current ratio and debt ratio for each year under the first scenario.
(3) Calculate the current ratio and debt ratio for each year under your revised
scenario with the additional debt added to long-term liabilities.
(4) Explain which of the two alternatives is riskier and why.