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If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company? 8. Which ratio is more relevant - quick ratio or current ratio? 9. What other factors would a bank or supplier look into in deciding whether to lend short term credit?

If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company? 8. Which ratio is more relevant - quick ratio or current ratio? 9. What other factors would a bank or supplier look into in deciding whether to lend short term credit?

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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7. If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company? 8. Which ratio is more relevant - quick ratio or current ratio? 9. What other factors would a bank or supplier look into in deciding whether to lend short term credit?
Provide Ratio analysis of the following companies and answer the following questions. Show the statement of financial position of three companies: Jollibee, Petron, and Globe. JFC Petron Globe ASSETS Current assets Cash 7,619 90.602 16,757 Receivables 7,621 17,927 23,543 Inventories 5,972 53,180 3,186 Other current assets 2,810 57,320 3,256 24,022 219,029 46,742 Non-current Assets Property, plant and equipment 13,364 153,650 117,299 Financial Investments 3,410 1,613 451 Other non-current assets 13,323 17,032 15,015 30,097 172,295 132,765 TOTAL ASSETS 54,119 391,324 179,507 LIABILITIES Current Liabilities Accounts Payable 2,455 29,496 12,458 Income Tax Payable 182 73 1,587 Short-term debt 1,865 133,388 Other current liabilities 14,589 39,630 46,305 19,091 202,587 60,350 Non-current Liabilities Long-term Debt 4,428 66,269 59,146 Other Liabilities 2,522 8,776 5,473 6,950 75.95 64,619 TOTAL LIABILITIES 26,041 277,634 124,969
Transcribed Image Text:Provide Ratio analysis of the following companies and answer the following questions. Show the statement of financial position of three companies: Jollibee, Petron, and Globe. JFC Petron Globe ASSETS Current assets Cash 7,619 90.602 16,757 Receivables 7,621 17,927 23,543 Inventories 5,972 53,180 3,186 Other current assets 2,810 57,320 3,256 24,022 219,029 46,742 Non-current Assets Property, plant and equipment 13,364 153,650 117,299 Financial Investments 3,410 1,613 451 Other non-current assets 13,323 17,032 15,015 30,097 172,295 132,765 TOTAL ASSETS 54,119 391,324 179,507 LIABILITIES Current Liabilities Accounts Payable 2,455 29,496 12,458 Income Tax Payable 182 73 1,587 Short-term debt 1,865 133,388 Other current liabilities 14,589 39,630 46,305 19,091 202,587 60,350 Non-current Liabilities Long-term Debt 4,428 66,269 59,146 Other Liabilities 2,522 8,776 5,473 6,950 75.95 64,619 TOTAL LIABILITIES 26,041 277,634 124,969
JFC Petron Globe EQUITY Capital Stock 1,064 9,485 8,429 Additional Paid-in Capital 4,452 19,653 36,049 Retained Earnings 22,646 40,815 10,852 Other Equity Accounts (84) 43,739 (792) Total Equity 28,078 113,692 54,538 TOTAL LIABILITIES AND EQUITY 54,119 391,324 179,507 Sales Revenue 90,671 482,535 103,235 Cost of Sales/Service (73,728) (463,100) (10,661) Gross Margin 16,943 19,435 92,574 Operating Expenses (10,806) (11,830) (59,506) Operating Profie 6,137 7,605 33,068 Other Income 748 1,736 1,255 Other Expenses (126) (5,528) (14,940) Net Income Before Tax 6,759 3,813 19,383 Income Tax (1,271) (804) (6,011) Cast Net Income After Tax 5,488 3,009 13,372
Transcribed Image Text:JFC Petron Globe EQUITY Capital Stock 1,064 9,485 8,429 Additional Paid-in Capital 4,452 19,653 36,049 Retained Earnings 22,646 40,815 10,852 Other Equity Accounts (84) 43,739 (792) Total Equity 28,078 113,692 54,538 TOTAL LIABILITIES AND EQUITY 54,119 391,324 179,507 Sales Revenue 90,671 482,535 103,235 Cost of Sales/Service (73,728) (463,100) (10,661) Gross Margin 16,943 19,435 92,574 Operating Expenses (10,806) (11,830) (59,506) Operating Profie 6,137 7,605 33,068 Other Income 748 1,736 1,255 Other Expenses (126) (5,528) (14,940) Net Income Before Tax 6,759 3,813 19,383 Income Tax (1,271) (804) (6,011) Cast Net Income After Tax 5,488 3,009 13,372
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