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December 31, 2018 Cash P500, 000 900, 000 650, 000 45, 000 Accounts receivable Inventory Prepaid assets Accrued liabilities Accounts payable Current portion, long-term notes receivable 285, 000 550, 000 65, 000 What is the maximum amount Australia can pay dividends per share and maintain current ratio of 2 to 1? Assume that all accounts other than cash remain unchanged A. P5.9 В. P2.50 C. P10 D. P7.2

December 31, 2018 Cash P500, 000 900, 000 650, 000 45, 000 Accounts receivable Inventory Prepaid assets Accrued liabilities Accounts payable Current portion, long-term notes receivable 285, 000 550, 000 65, 000 What is the maximum amount Australia can pay dividends per share and maintain current ratio of 2 to 1? Assume that all accounts other than cash remain unchanged A. P5.9 В. P2.50 C. P10 D. P7.2

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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8:02 ¢ E G O :46 93 December 31, 2018 Cash P500, 000 900, 000 650, 000 Accounts receivable Inventory Prepaid assets 45, 000 Accrued liabilities 285, 000 Accounts payable Current portion, long-term notes receivable 550, 000 65, 000 What is the maximum amount Australia can pay dividends per share and maintain current ratio of 2 to 1? Assume that all accounts other than cash remain unchanged A. P5.9 7. It is the policy of the company that the current ratio cannot fall below 1.5 to 1.0. it current liabilities are P400, 000 and the present current ratio is 2 to 1. How much is the maximum level of new short-term loans it can secure without violating the policy? A. P400, 000 В. P2.50 C. P10 D. P7.2 В. Р300, 000 C. P266, 667 D. P800, 000 8. As a company becomes more conservatives in working capital policy, it would tend to have a(an) A. Decrease in its acid-test ratio в. Increase in the ratio of current liabilities to non-current liabilities. С. Increase in the ratio of current assets to units of output. D. Increase in funds invested in common stock and decrease in funds invested in marketable securities. 9. All of the following statements in regard to working capital are correct except Current liabilities are an important source of financing for many small A. firms. B. Profitability varies inversely with liquidity. C. The hedging approach to financing involves matching maturities of debt with specific financing needs. D. Financing permanent inventory build-up with long-term debt is an example of an aggressive working capital policy. Compared to other firms in the industry, a company that maintains a conservative working capital policy will tend to have a Greater percentage of short-term financing. 10. A. В. Greater risk of needing to sell current assets to repay debt. C. Higher ratio of current assets to fixed assets. D. Higher total asset turnover. 11. The Working capital RED Company at December 31, 2017 was P10, 000,000. Selected information for the year 2018 for RED Company is as follows: Working capital provided from operations P 1,700, 000 Capital expenditures 3,000, 000 Proceeds from short-term borrowings 1,000, 000 Proceeds from long-term borrowings 2,000, 000 Payments on short-term borrowings 500, 000 Payments on long-term borrowings 600, 000 Proceeds from issuance of common stock 1,400,000 Dividends paid on common stock 800, 000 What is RED working Capital at December 31, 2012? A. P11, 200, 000 B. P11, 500, 000 C. P10, 700, 000 D. P12,000 12. During 2018, Mason Company's current assets increased by P120, current liabilities decreased by P50, and net working capital A. Increased by P70. C. C. Decreased by P70. В. Did not change D. Increased by P170.
Transcribed Image Text:8:02 ¢ E G O :46 93 December 31, 2018 Cash P500, 000 900, 000 650, 000 Accounts receivable Inventory Prepaid assets 45, 000 Accrued liabilities 285, 000 Accounts payable Current portion, long-term notes receivable 550, 000 65, 000 What is the maximum amount Australia can pay dividends per share and maintain current ratio of 2 to 1? Assume that all accounts other than cash remain unchanged A. P5.9 7. It is the policy of the company that the current ratio cannot fall below 1.5 to 1.0. it current liabilities are P400, 000 and the present current ratio is 2 to 1. How much is the maximum level of new short-term loans it can secure without violating the policy? A. P400, 000 В. P2.50 C. P10 D. P7.2 В. Р300, 000 C. P266, 667 D. P800, 000 8. As a company becomes more conservatives in working capital policy, it would tend to have a(an) A. Decrease in its acid-test ratio в. Increase in the ratio of current liabilities to non-current liabilities. С. Increase in the ratio of current assets to units of output. D. Increase in funds invested in common stock and decrease in funds invested in marketable securities. 9. All of the following statements in regard to working capital are correct except Current liabilities are an important source of financing for many small A. firms. B. Profitability varies inversely with liquidity. C. The hedging approach to financing involves matching maturities of debt with specific financing needs. D. Financing permanent inventory build-up with long-term debt is an example of an aggressive working capital policy. Compared to other firms in the industry, a company that maintains a conservative working capital policy will tend to have a Greater percentage of short-term financing. 10. A. В. Greater risk of needing to sell current assets to repay debt. C. Higher ratio of current assets to fixed assets. D. Higher total asset turnover. 11. The Working capital RED Company at December 31, 2017 was P10, 000,000. Selected information for the year 2018 for RED Company is as follows: Working capital provided from operations P 1,700, 000 Capital expenditures 3,000, 000 Proceeds from short-term borrowings 1,000, 000 Proceeds from long-term borrowings 2,000, 000 Payments on short-term borrowings 500, 000 Payments on long-term borrowings 600, 000 Proceeds from issuance of common stock 1,400,000 Dividends paid on common stock 800, 000 What is RED working Capital at December 31, 2012? A. P11, 200, 000 B. P11, 500, 000 C. P10, 700, 000 D. P12,000 12. During 2018, Mason Company's current assets increased by P120, current liabilities decreased by P50, and net working capital A. Increased by P70. C. C. Decreased by P70. В. Did not change D. Increased by P170.
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