CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-3 Calculating Financial Strength Analysis.

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-3 Calculating Financial Strength Analysis

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 17-3 Total Current Assets Total Current Liabilities Working Capital –= page 512 WORKING CAPITAL = Current Year$1,254,100.00$596, – $658, = Prior Year$1,118,600.00$685, – $433,200.00

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 17-3 Total Current Assets Total Current Liabilities Current Ratio ÷= page 513 CURRENT RATIO = Current Year$1,254,100.00$596, ÷ 2.1 times = Prior Year$1,118,600.00$685, ÷ 1.6 times

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 17-3 Total Quick Assets (Cash + Accounts Receivable) Total Current Liabilities Acid-Test Ratio =÷ page 513 ACID-TEST RATIO ($206,100 + $474,000) = Current Year$596, ÷ 1.1 times ($104,300 + $569,200) = Prior Year$685, ÷ 1.0 times

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 17-3 page 514 DEBT RATIO Total Liabilities Total AssetsDebt Ratio ÷= = Current Year$1,016,100.00$2,067, ÷ 49.1% = Prior Year$ 910,400.00$1,759, ÷ 51.7%

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 17-3 page 515 EQUITY RATIO Total Stockholders’ Equity Total Assets Equity Ratio ÷= = Current Year$1,051,600.00$2,067, ÷ 50.9% = Prior Year$ 849,300.00$1,759, ÷ 48.3%

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 17-3 Total Stockholders’ Equity Shares of Capital Stock Outstanding Equity per Share ÷= = Current Year$1,051,600.00$60, ÷ $17.53 = Prior Year$ 849,300.00$50, ÷ $16.99 page 515 EQUITY PER SHARE

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 17-3 page 517 TERMS REVIEW working capital current ratio quick assets acid-test ratio debt ratio equity ratio