 using the following year-end information, calculate the current ratio and the asset ratio. All right, so we're gonna need the current assets and current liabilities as well as quick asset, assets or asset assets. So let's calculate that first. I'm gonna say current assets. And we have to decide of these, which ones of course are current. And of course cash is current, short-term receivables is current, account receivables current, inventory is current, as well as prepaid expenses. So they gave us all these current assets. Things that would not be current would be if they gave us some like property, plants and equipment. So I'm just gonna put those here. Gonna bring those numbers down, 38, 6, 9,000, 40,000 and two, four. All right, and 17, four. And so the total then would be here. Gonna go and sum that up. I'm gonna underline, home tab, font group and underline and just add those numbers up. Those numbers adding up to the sum equals the sum of this plus this plus this plus this plus this giving current assets of 345. Now let's do current liabilities. So current liabilities then would be just the payable and the other current liabilities. So those are the current liabilities. Long-term liabilities would be like long-term notes and stuff like that. So they didn't give us any of those. So we're just gonna say, all right, so we got that 22, three. And if we sum that up, underline total, the total current liabilities then would be the sum of those. And so if we were to calculate then the current asset ratio, we would just take the current assets divided by the current liabilities. So that's gonna be equal to the current assets, this 345,000 divided by, divided by the current liabilities, 1095. And so that's not quite three because we need to add some decimals. We do that by going to the home tab, numbers and increase in the decimals, 3.15. It's a little bit longer than that, but we're gonna round it to 3.15, which Excel will do automatically like so. Okay, so then the quick ratio or the asset test ratio is the next one we're gonna have. So I'm gonna, so they call it the asset test ratio. And it's a similar ratio, but it's going to be more restrictive in terms of the assets, meaning it's gonna include cash. Well, let's just do the the asset assets, asset assets or quick assets. That's the thing that differs. So we're gonna say that the current assets are gonna be more restricted. We're gonna have cash, we're gonna have short-term receivable, we're gonna have counts receivable, but we're not gonna have inventory and we're not gonna have prepaid expenses. So I'm gonna copy these and say, these are the more restricted assets in our ratio that we will then calculate. And so we're gonna sum those up. Those are our asset or quick assets. And then we're gonna have the, what is it, acid ratio, asset ratio. That's good enough. All right. And that's gonna be the same, it's gonna be the same current liabilities, but we're gonna have the current or quick assets with the asset assets divided by the current liabilities. So that will give us one. We're gonna go up to the home tab. We're gonna go to the numbers and we will add the decimals on that. So note that, of course, the current ratio is always gonna be higher. And that's because we're trying to see how many times we could pay the liabilities off with the current assets. But the quick assets gonna be more kind of restricted. And that's gonna be more, I guess, conservative in that we're gonna restrict the assets to things that are closer to cash, more liquid assets. Next one says that a company's current assets are 23,920. Its quick assets are 1490 and its current liabilities are 12,270. Its asset test ratio equals what? So this one, they actually just gave us the numbers. It's just a matter to know what the ratio is and the ratio for the asset test ratio are going to take the quick assets, which are the more restrictive assets, which don't include inventory. And that, they say, had quick assets of 14,090. It's always gonna be less than the current assets. And we're gonna divide that by the current liabilities, let's say current liabilities, which were 12,270. So we then will take the 14,90 quick assets over divided by 12,270 current liabilities. Then we need to add some decimals. So I'm gonna go up to the home tab, the numbers group and add decimals like so, 1.15. Again, it might be a little bit longer, but we're probably going to most problems will take it to places out like so. Next one says that a corporation's quick assets are 1,111,000. Its current assets are 13,260,000 and its current liabilities are 1,136,000. Its asset ratio equals what? So same thing, we just gotta know what the asset ratio is. So we're gonna take the quick assets. It's gonna include the quick assets, which are less than the current assets, 6,111,000. And we're gonna take the current liabilities, which are quick assets, current assets, and its current liabilities, 8,136,000. And we will then divide those out. So we're just gonna take the quick assets divided by the current liabilities. And it's not one, it's gonna be home tab. I'm going to the home tab, going to the numbers group and we're gonna add some decimals and we get to 0.75. Now this one's interesting, of course, because we have the current liabilities are greater than the quick assets, meaning we can't pay off the current liabilities with our quick assets, it's less than that. Also note that if we're dealing with these big numbers and you're talking about ratios, of course, you can, we can knock off these three zeros in a ratio if we wanted to do it a little bit faster, if we have a time constraint. It'd just be 6,111, knock off the three or divide by 1,000 to both sides, you know, eight. So we have here, we've got the 8,136, and if we divide that out, then we should come up with the 6,111 divided by the 8,136. Once again, adding the decimals home tab, numbers group, adding decimals and we get to 0.75 once again. Next one, company had cash sales of 95,525, credit sales of 84,200, sales returns and allowances of 2,200 and sales discounts of 3,975. Net sales for the period would be what? So it's important here not to confuse net sales and net income. So net sales, remember, is basically the sales minus the contra sales accounts kinda, which includes sales returns and allowances and discounts. So we're gonna, if we were to calculate this, then we could take the sales amount and they gave us two sales numbers so we can subcategorize that and say we had cash sales which is part of sales of 95,525 and we had the credit sales, credit sales of, that's the 84,200, that gives us total sales and so sales is the sum of the cash plus the credit sales. So that's our sales amount. Now we have the sales returns and allowance, returns and allowance, it's gonna abbreviate like so. That's gonna reduce sales. So that I'm gonna put that in as a negative. In this case, reducing the sales 2200 and the sales discount. Sales discount, that's gonna be the discounts we gave to our customers, negative 3975 and that gives us net sales. Not net income, net sales. I'm gonna go ahead and sum these up and as we do sum that equals SUM, it's this number minus this number minus this number because those are in there as negatives if we were to put it into a calculator. Giving us the 173,550. Now note that these amounts here are contra sales accounts that basically act like expenses in that they're gonna reduce the net income as well as the net sales at the end of the day but they're basically kind of contra sales and they're up in the sales area. Next one says that a company's net sales were 7,6900. Its cost of goods sold was $243.30 and its net income was 55,900. Its gross margin ratio is what? Okay, so to do that, we have to figure out first the gross margin. The gross margin will be the sales minus the cost of goods sold. So our most important relationship generally if we sell stuff inventory. So we're gonna take the sales number which they gave us to be 716900. We're gonna take the cost of goods sold number which they gave us to be 243030. That subtraction problem will give us the gross profit. That's the gross profit and we'll subtract those out. That's gonna be the sales 7169 minus the cost of goods sold 24330. That gives us the gross profit. I'm gonna underline that. Home tab font group underline. Now to figure out the gross profit margin we're gonna take the gross profit divided by the sales. So I'm usually put that next to the gross profit and I'm gonna say that equals the gross profit divided by the sales. And I'm gonna go ahead and go to the home tab. We're gonna go to the numbers group and add decimals on that. Like so and we could also, it's often in the form of a percentage if we move the decimal two places to the right we would then get a percentage and if we want one more decimal depending on how it would be formatted 66.1 or as many as we want, we only need one apparently. And there we have it. So basically for every sales that we make we're kind of going away with every dollar we're going away with 66 cents basically. That's gonna be the gross profit ratio.