After calculating the quick ratio for an entity and finding that the ratio’s value was 0.9, a student analyst decided that the company was in a sound position for paying its liquid liabilities. Discuss at least 4 shortcomings of making such a conclusion.
Q: 1. For Total current assets (on the Balance Sheet), use an Excel function to calculate the value. 2.…
A: The objective of the question is to correct and analyze the given balance sheet of Filler…
Q: Match (by letter) the following items with the description or example that best fits. Each letter is…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub- parts for…
Q: A company is experiencing a period of strong fi nancial performance. In order to increasethe…
A: The Earnings forecasts are based on business growth and profitability projections of experts. Most…
Q: Three statements are given below.a. A financial item that may be useful to investors is not required…
A: Accounting information is required to have certain qualitative characteristics in order to make it…
Q: Which of the following is most likely true concerning the stability and trend of earnings?…
A: Revenue analysis does not depend on the trend of earnings. Trend of earnings shows whether the…
Q: James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the…
A: Financial Ratios help a company's creditors, managers, and share-holders assess its performance in a…
Q: Two online travel companies, Company A and Company B, provide the following selected financial data:…
A: Lets understand the basics.Times interest earned ratio indicates that, how many times interest…
Q: 4 . Both accounts payable and deferred revenue are classifi ed as current liabilities. Discuss the…
A: Revenue: Revenue can be defined as income earned by any firm or an individual from the performance…
Q: A friend asks you about whether GAAP requires companies to disclose forecasts of financial variables…
A: Accounting information includes all the relevant and important information about the company. The…
Q: Which of the following statement is TRUE about the financial planning? A) Financial planning should…
A: Financial Planning is done to achieve long term goals of utilizing capital at its best to maximize…
Q: Which of the following would be an example of conservative accounting? a. Recording an increase in…
A: According to conservative Accounting principle all anticipated losses should be recorded in the…
Q: Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going…
A: Accounting Assumption / Principles : These are the accounting rule which are applicable to prepare…
Q: For the following situations, identify whether the situation represents a violation or a correct…
A: There are principles and assumptions based on which whole accounting depends regarding how to enter…
Q: Which of the following terms defines the underlying assumption of Going Concerns? A The company is…
A: The companies use a set of rules and guidelines in the preparation of financial statements with a…
Q: Required: 1. Calculate the 9 financial ratios listed below for Lewis and Ramsey 2. Indicate which…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: h of the following statements is correct? Statement 1. Ratios are used to compare different…
A: Financial statements prepared by the company are analyzed by various stakeholders. Analysis of…
Q: TB MC Qu. 10-139 (Static) Why doesn't stockholders' equity equal the... Why doesn't stockholders'…
A: Stockholders equity is total amount of equity attributable to the owners of the business. This is…
Q: In no less than 50 words, discuss the benefits and shortcomings of ratio analysis. How are they best…
A: Ratio analysis is a powerful tool for measuring the financial performance of a company. It can be…
Q: Which of the following assumptions is embodied in the AFN equation? a. All balance sheet accounts…
A: AFN equation related to the additional fund needed , It is assumed that an increase in sales will…
Q: 50) Which of the following is true of the acid-test ratio? A) It measures a company's ability to pay…
A: The acid-test ratio, also known as the quick ratio, is a financial metric used to assess a company's…
Q: Using two measures of liquidity (current ratio and quick or acid test ratio), discuss whether there…
A: Current Ratio:The current ratio is a financial metric used to assess a company's short-term…
Q: 1.How can exit value accounting be used to assess the financial risk of a balance sheet.…
A: Answer:- Balance sheet meaning:- A balance sheet can be defined as the financial statement that…
Q: While you know that the balance sheet aging of receivables method is more accurate, it does require…
A: Aging method of receivables is one of the strong techniques which was used to determine the actual…
Q: 1. A company's accounting information system (AIS) plays an important role in the conversion cycle.…
A: AIS stands for Accounting Information System. An AIS is a systematic and structured framework that…
Q: Identify and discuss at least three (3) things you can do via QuickBooks to control A/R so that it…
A: Account receivable: it is the current asset of the organisation and it is the amount paid by debtors…
Q: Which of the following statements about GAAP is not true? O a. GAAP impacts how companies report and…
A: GAAP is the set of generally accepted accounting principles, which tell about what are the rules,…
Q: Which business transaction will affect the quick ratio? a. Purchase a fixed asset with money…
A: The quick assets ratio is calculated as quick assets divided by current liabilities.
Q: How can the qualitative relevance characteristic be improved in high-quality accounting information?…
A: Accounting information is related to the activities of the business. This information is provided to…
Q: A company’s management believes that substantial doubt exists that the company can meet its…
A: Definition: Financial statements: Financial statements are condensed summary of transactions…
Q: A company reports accounting data in its financial statements. This data is used for financial…
A: The analysis likely includes incorrect and misleading conclusions. The ratio analysis is directed by…
Q: When analyzing a company's current ratio: A. the industry in which the company operates should…
A: Current ratio is the ratio showing the entity’s capability to pay its short-term commitments or…
Q: Evaluate the liquidity position of Jackson relative to that of the average firm in the industry.…
A:
Q: How can the enhancing characteristic timeliness be improved in high-quality accounting information?…
A: Accounting information is the information which is used by the stakeholders of the company to take…
Q: Which of the following statements is not true about the current ratio? A benchmark of 3.00 to 1.00…
A: According to the given question, we are required to find out the correct answer from the available…
Q: In my accounting class, I am unable to find Net present value and profibility index. With many…
A: Project 2 Initial Cost $ 36,45,000.00 Net income $ 5,83,200.00 Time Period 5 Discount…
Q: While the bare minimum may be last year's balance sheet, it is unlikely that you can produce useful…
A: : Financial forecasting is a type of process in which a business will perform activities for the…
Q: pared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes…
A: Ratio analysis is an important part in decision making because it help us to analyse the financial…
Q: I am struggling in my accounting coarse and need help with breaking down the accounting equation,…
A: Accounting follows three golden rules1 For personal Accounts-Debit the receiver and credit the…
Q: Henry Josstick has just started his first accounting course and has prepared the following balance…
A:
Q: How to interpret Priceline's method of reporting total bookings as revenue versus their agency fee.…
A: we can not interpret high reported revenue as a positive indicator for investing .we need to check…
Q: Give an example of accounting problem about the use of degree of operating leverage, For that…
A: Example accounting problem: A company is considering a project that would require an initial…
Q: James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the…
A: Ratio analysis is evaluating the information of the company using relativeness with the other data.
Q: Describe some different types of ratios and how they are used to assess performance. Explain the…
A: Financial ratios are powerful tools used to assess a company's financial performance and health.…
Q: A firm's market-to-book ratio might be greater than 1.0 due to accounting reasons. An example of an…
A: Please find the answer to the above question below:
Q: The fact that generally accepted accounting principles allow companies flexibility in choosing…
A: Depreciation:It is the amount of reduction in the value of a tangible fixed asset due to tear and…
After calculating the quick ratio for an entity and finding that the ratio’s value was 0.9, a student analyst decided that the company was in a sound position for paying its liquid liabilities. Discuss at least 4 shortcomings of making such a conclusion.
Step by step
Solved in 2 steps
- Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Following are the auditor’s calculations of several key ratios for ROCO. The primary purpose of this information is to understand the client’s business and assess the risk of financial failure, but any other relevant conclusions are also desirable. Ratio 2020 2019 2018 2017 2016 1 Current ratio 2.42 2.83 3.17 3.20 3.25 3.15 2 Quick ratio 1.60 2.25 2.92 2.87 2.64 2.58 3 Times interest earned 2.35 2.76 3.38 4.81 6.12 4.86 4 Accounts receivable turnover 3.31 4.42 3.13 4.25 4.50 4.48 5 Days to collect receivables 110.27 82.58 116.61 85.88 81.11 81.47 6 Inventory turnover 1.08 .96 1.45 2.24 2.26 2.01 7 Days to sell inventory 337.96 380.2 251.72 162.94 161.5 181.59 8 Profit margin .52 .51 .62 .57 .53 .6 9 Return on assets .08 .08 .13 .1 .08 .11 10 Return on equity .05 .06 .10 .10 .11 .09 11…Which of the following statements is not true about the current ratio? A benchmark of 3.00 to 1.00 is believed to be the ideal benchmark for the current ratio of a company. The current ratio measures an organization’s liquidity. The current ratio is found by dividing current assets by current liabilities. A current ratio below 1.00 to 1.00 signals the potential for financial difficulties.
- Choose the correct. A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do next?a. Management should disclose that substantial doubt exists that the company can remain in existence.b. Management should examine the plans created to address the concern.c. Management should adjust all asset balances to fair value.d. Management should adjust all liabilities to expected settlement amounts.Mr. Abdullah is an auditor in XYZ LLC. His job is to see the correctness of financial statements and to give suggestions. He came to know that his company is entering into a new product line, so he started discussing about it on various places and about its projection in the future. In this situation there is a chance of _________________. a. None of the options b. Familiarity threat c. Self review threat d. Advocacy threat Clear my choiceA first-year ZU business students states: "There is no use in calculating financial ratios, because each company is different and we have nothing to compare the ratios to". Do you agree with this statement? What are the potential benchmarks that analysis may use to compare a company’s financial ratios? What are the advantages and disadvantages of these benchmarks
- As the financial analysts of Mezza Holding Company you are required to write a Memo to the Financial Manager describing the performance of the company and your suggestions on future improvements based on the following financial statements. . State the purpose of your Memo. Describe and interpret ratio results and provide company’s performance analysis based on them. Describe the weaknesses and strength of the company’s financial data. Provide suggestions on how to improve company’s performance.Three statements are given below.a. A financial item that may be useful to investors is not required to be reported because thecost of measuring and reporting this information is judged to be too great.b. Timely information that is used to predict future events or provide feedback about priorevents is said to possess this characteristic.c. A quality of information that enables an analyst to evaluate the financial performance oftwo different companies in the same industry.Required:Give the qualitative characteristic or constraint that is most applicable to each of the statements.Listed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials. Violation: (Yes/No) Applicable Assumption/Principle: h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value.…
- TRUE OR FALSE. Please answer number 10-12 only and no need to explain thanks!Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.A Corporation's accounting statement of affairs shows a recovery percentage of 120%. The rate of recovery means that Group of answer choices a.Secured creditors will receive an amount in excess of the book value of their claims b.Unsecured creditors will receive an amount in excess of the book value of their claims c.Stockholders may expect some returns on their interests d.An error was made in the preparation of the statement