The following accounting information pertains to Eckert and Ragland companies at the end of 2006:

Required:

a. Organize the class into two sections and divide each section into groups of three to five students. Assign each of the sections one of the companies.
Group Tasks 

(1) Identify the current assets and current liabilities, and compute the current ratio for the particular company assigned to the group.
(2) Assuming that all assets and liabilities are listed here, compute the debt to assets ratio for the particular company assigned to the group.

Class Discussion

b. Have a representative from each section report the current ratio and debt to assets ratio for their respective companies.

c. Solicit comments regarding which company has the greater financial risk in both the short and long term.

Transcribed Image Text:

Account Title Eckert Ragland Cash Wages Payable $ 22,000 $ 30,000 30,000 30,000 Merchandise Inventory Building 45,000 66,000 120,000 95,000 Accounts Receivable 53,000 37,000 Long-term Notes Payable 115,000 145,000 Land 68,000 60,000 Accounts Payable 60,000 54,000 Sales Revenue 330,000 325,000 Expenses 285,000 295,000