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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42daf456-7ec2-44d3-b7b3-441a17d07bff%2F673e2493-1a18-40b3-9233-c8a89938ed93%2F1lkttmm_processed.jpeg&w=3840&q=75)
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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