# Problem 3-98 Bronco Electronics-' current assets consist of cash- mark.docx

Jan. 31, 2023
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### Problem 3-98 Bronco Electronics-' current assets consist of cash- mark.docx

• 1. Problem 3-98 Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Inventories \$ 200,000 Total assets \$ 1,700,000 Current ratio 4.0 Acid-test ratio 2.75 Debt to equity ratio 1.5 Required: Compute the long-term liabilities for Bronco: Solution Current ratio = Current Asset/Current Liability Current Asset = 4*Current Liability Acid-test ratio = (Current Asset - Inventories)/Current Liability 2.75 = (4*Current Liability - 200000)/Current Liability 2.75*Current Liability = 4*Current Liability - 200000 Current Liability = 200000/(4-2.75) Current Liability = \$ 160000 Current Asset = 4*160000 Current Asset = \$ 640000 Debt to Equity ratio = 1.5 Total Debt = 1.5/(1+1.5) * 1700000 Total Debt = \$ 1,020,000 Total Debt = long-term liabilities + Current Liability Long-term liabilities = 1020000 - 160000 Long-term liabilities = \$ 860,000