Can you provide numerical examples of a fictitious company with given details and calculate a few ratios?

Question

Accepted Answer

Calculating financial ratios for a fictitious company to assess its performance and financial health.

Example Company: ABC Corp with total assets of $500,000 and total liabilities of $300,000.
Calculate Debt-to-Equity Ratio: Total Liabilities / Total Equity. Here, Equity = Assets - Liabilities = $200,000.
Debt-to-Equity Ratio = $300,000 / $200,000 = 1.5.
Calculate Current Ratio: Current Assets / Current Liabilities. Assume Current Assets = $150,000 and Current Liabilities = $100,000.
Current Ratio = $150,000 / $100,000 = 1.5, indicating good short-term financial health.

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