Question 1

Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, calculate the firm's current ratio.

Round the answers to two decimal places

Balance Sheet December 31, 2013

Cash and marketable securities $112,000 Accounts payable $211,000

Accounts receivable $325,000 Notes payable $51,500

Inventories $426,000 Accrued expenses $50,100

Prepaid expenses $10,700 Total current liabilities $312,600

Total current assets $873,700 Long-term debt $225,000

Gross fixed assets $1,514,000 Par value and paid-in-capital $117,000

Less: accumulated depreciation $315,000 Retained Earnings $1,418,100

Net fixed assets $1,199,000 Common Equity 1,535,100

Total assets $2,072,700 Total liabilities and owner's equity $2,072,700

Income Statement, Year of 2013

Net sales (all credit) $3,256,600.00

Less: Cost of goods sold $2,572,714.00

Selling and administrative expenses $323,000.00

Depreciation expense $115,000.00

EBIT $245,886.00

Interest expense $29,600.00

Earnings before taxes $216,286.00

Income taxes $86,514.40

Net income $129,771.60