Answer To Accounting Question IFS Test No 3 On Interpretation of Financial Statements

Answer to Accounting Test Question IFS No 3:

(a) current ratio

= Current asset/current liabilities

= ($200,000+$810,000+$830,000)/$710,000)

= 2.59

(b) acid-test ratio

= (Current assets- inventory)/current liabilities


= 1,42

(c) debt to equity ratio

= (Total liabilities)/Shareholders fund



(a) times interest earned ratio

=(Net Income+ Interest Expense+ Income Tax)/Interest Expense


=10 times

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