What is the overall assement of the company's credit risk (explain)? Is there any difference between the two years? RatiosFormula20182017Current ratioCurrent ratio = Current Asset / Current Liabilities12494.2/5684.25283.4/4220.72,1980577741.251782882.201.25Quick ratio =( Cash + Short term investments + Accounts receivable )/Quick ratioCurrent Liabilities(8756.3+ 181.5+693.1)/ 5684.2(2462.3+ 228.6+870.4)/4220.71.6943281380.843769991.1.690.84Liabilities to Equity ratio Liabilities to Equity ratio = Total Liabilities / Equity22980.6/ 1175.88908.6/5457.019.544650451.63250870419.541.63Total debt to equity ratio Total debt to equity ratio= (Short term debt + Long term debt)/Equity (349.9+ 9090.2)/1175.8(0+ 3932.6)/54578.0286613370.7206523738.030.72Times interest earnedTimes interest earned = EBIT/ Interest expenses3883.3/ 170.34134.7/92.522.8027011244.6994594622.8044.70Cash from operations to Cash from operations to total debt = Cash from operations / (Short termtotal debtdebt + Long term debt )11937.8/ (349.9+ 9090.2)4251.8/ (0+ 3932.6)1.2645840621.0811676751.261.08Free operating cash flow Free operating cash flow to total debt= (Cash from operations - Capitalexpenditure)/ (Short term debt + Long term debt )to total debt(11937.8-1976.4)/ (349.9+ 9090.2) (4251.8-1519.4)/ (0+ 3932.6)1.0552218730.6948075061.060.69

Credit risk refers to the chances of incurring a loss from a situation when the borrower fails to…

Answered: at is the overall assement of the…

Business

Accounting

at is the overall assement of the company's credit risk (explain)? Is there any difference between the two years?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: What is the impact of changes in interest rates on the accounting for variable-rate promissory…

A: The chance of the borrowed or invested quantum that's charged or earned as payment for the…

Q: Explain the initial measurement of, a. short-term notes receivable b. interest bearing long-term…

A: Hi! Thank you for the question. As per the honor code, We are allowed to answer three sub-parts at a…

Q: What is an example of Long Term debt? Why?

A: We have to explain ling term debt by an example.

Q: he _____ or _____ interest rate reflects the real rate of return on an investment. a. annual or…

A: The rate of return without considering the impact of compounding and effective is the rate of return…

Q: A business wishes to discount a future value dollar amount to present value. Which type of interest…

A: The correct type of interest used for discounting a future value dollar amount to present value is…

Q: Which one of the below most likely respresents the periodic receipts of interest? O the coupon rate.…

A: Periodic payments means fixed amount paid regularly to the investor. Example interest amount on…

Q: How do risk and inflation impact interest rates in the economy?

A: Introduction: The inflation needs to be adjusted in the interest rate of mortgage payments. Due to…

Q: What does the days’ sales in receivables indicate, and how is it calculated?

A: Day's Sales: Day's sales refer to the average number of days for which a receivable remain…

Q: How is periodic interest determined for outstanding liabilities? For outstanding receivables? How…

Q: On January 1, 2020, Stellar Corporation issued $590,000 of 9% bonds, due in 8 years. The bonds were…

A: >Bonds Payable are the source of finance for the companies. >The bondholders are…

Q: The value of a sum after investing over one or more periods is called a) Discount Value b) None…

A: Using Time value of money concepts

Q: tatements, how would one calculate the Book Debt-to-Equity Ration and the Market Debt-to-Equity…

A: Debt to Equity ratio is the ratio which indicates the relative proportion of debt and equity which…

Q: Which of the following risk is affected largely by the debt-to-equity ratio? Liquidity risk…

A: The debt-to-equity (D/E) ratio reflects a firm's revenue obligations to its shareholder equity and…

Q: Why What kind of stream of income does a debt security pay for the duration of the security? A fixed…

A: The Answer

Q: If accrued liabilities are overestimated in the current period, the reported income in a following…

A: Accrued liabilities represent expenses that a company has incurred but has not yet paid as of the…

Q: What are lines of credit? From the viewpoint of a short-term creditor, why do lines of credit…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: What are factors that affect the expected rate of return for holders of debt and equity?

A: The expected return is the return which the investors expect to receive in return from their…

Q: Explain how a new firm’s receivables balance is built up over time.

A: Accounts receivables: When a company makes credit sale, the sale is recorded by debiting Accounts…

Q: What is the Relationship between Changes in Interest Rates, Investor Returns, and “Going-In”Cap…

A: The question is based on the concept of relation between change in interest rate and its impact on…

Q: How do differences in fiscal policies. impact interest rate parity?

A: Interest rate parity (IRP), a cornerstone of international finance that states that the difference…

Q: Explain the accounting for long-term notes payable.

A: Notes payable: Notes payable is a written promise to make payment for specific sum at a certain…

Q: Compute and interpretfinancial ratios that would beuseful to a long-term creditor.

Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

What is the overall assement of the company's credit risk (explain)? Is there any difference between the two years?

Ratios
Formula
2018
2017
Current ratio
Current ratio = Current Asset / Current Liabilities
12494.2/5684.2
5283.4/4220.7
2,198057774
1.25178288
2.20
1.25
Quick ratio =( Cash + Short term investments + Accounts receivable )/
Quick ratio
Current Liabilities
(8756.3+ 181.5+693.1)/ 5684.2
(2462.3+ 228.6+870.4)/4220.7
1.694328138
0.843769991.
1.69
0.84
Liabilities to Equity ratio Liabilities to Equity ratio = Total Liabilities / Equity
22980.6/ 1175.8
8908.6/5457.0
19.54465045
1.632508704
19.54
1.63
Total debt to equity ratio Total debt to equity ratio= (Short term debt + Long term debt)/Equity (349.9+ 9090.2)/1175.8
(0+ 3932.6)/5457
8.028661337
0.720652373
8.03
0.72
Times interest earned
Times interest earned = EBIT/ Interest expenses
3883.3/ 170.3
4134.7/92.5
22.80270112
44.69945946
22.80
44.70
Cash from operations to Cash from operations to total debt = Cash from operations / (Short term
total debt
debt + Long term debt )
11937.8/ (349.9+ 9090.2)
4251.8/ (0+ 3932.6)
1.264584062
1.081167675
1.26
1.08
Free operating cash flow Free operating cash flow to total debt= (Cash from operations - Capital
expenditure)/ (Short term debt + Long term debt )
to total debt
(11937.8-1976.4)/ (349.9+ 9090.2) (4251.8-1519.4)/ (0+ 3932.6)
1.055221873
0.694807506
1.06
0.69

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How does accounting rate of return (ARR) differ from the internal rate ofreturn (IRR)?
The interest rate observed in the marketplace for a debt instrument? Observed interest rate Inflation-free interest rate Risk-free rate of interest Real rate of interest
How do each of the items in a firm’s credit policy—defined to include the credit period, the discountand discount period, the credit standards used,and the collection policy—affect its sales, the levelof its accounts receivable, and its profitability?
What is the principal amount of a note receivable plus the interest due called? promissory value maturity value expected value face value
Why is long term debt the only financing activity? What about current debt, dividends, and current stock?
What is the interest rate the borrower will pay after the first rate adjustment?
How do premiums and discounts on long-term debt securities affect interest expense?
What-if forecasting provides information regarding how much net interest income changes when interest rates are assumed to increase/decrease by various amounts. Select one: True False
2.-In compound interest calculations, the interest rate applied can be known from the initial and final value of a deposit, and the time it was deposited. true or false?
What are the forward rates of interest? How are they determined? What do they have to do with indexes used to adjust ARM payments?
Discuss how a form of debt can be classified as both Current and Long-Term Liabilities. Why do investors care?
Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. True False