Kawani Corporation has been operating for several years

and on #1191

Kawani Corporation has been operating for several years, and on December 31, 2014,
presented the following statement of financial position.

Cost of goods sold in 2014 was $420,000, operating expenses were $51,000, and net income
was $27,000. Accounts payable suppliers provided operating goods and services. Assume that
total assets are the same in 2013 and 2014.

Instructions

Calculate each of the following ratios:

(a) Current ratio

(b) Acid-test ratio

(c) Debt-to-total-assets ratio

(d) Rate of return on assets

(e) Days payables outstanding

For each ratio, also indicate how it is calculated and what its significance is as a tool for
analyzing the company's financial soundness.

Kawani Corporation has been operating for several years and on

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