Short-Term Loans Expected to Be Refinanced
The following information comes from the financial statements of Burton Davis Company.
|
Current assets |
$ 75,000 |
|
Accounts payable |
50,000 |
|
Short-term loan payable |
60,000 |
|
Long-term debt |
100,000 |
|
Total liabilities |
300,000 |
|
Total stockholders’ equity |
200,000 |
Burton Davis has arranged with its bank to refinance its short-term loan when it becomes due in three months. The new loan will have a term of five years.
Instructions:
1. Compute the following ratio values.
(a) Current ratio
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