At December 31 , 2014 , Shorts Company had retained earnings of $ 2,184,000 . During 2014 , the company issued stock for $ 98,000 , and paid dividends of $ 34,000 . Net income for 2014 was $ 402,000 . How much was the retained earnings balance at the beginning of 2014 ?
Question 6
The current ratio measures liquidity and higher means the company is more liquid . The debt to assets ratio measures solvency and higher is not always better . We don ’ t know how many outstanding shares each company has so we cannot compare profitability .
The following ratios are available for Leer Inc . and Stable Inc .
Current Ratio |
Debt to Assets Ratio |
Earnings |
per Share |
|
|
Leer Inc . 2:1 75 % $ 3.50 Stable Inc . 1.5:1 40 % $ 2.75
Question 7
Solvency ratios are good indicators of a company ’ s ability to survive over an extended period of time .