Intella's current assets total to $20 million versus $10 million of current liabilities, while AWD's current assets are $10 million versus $20million of current liabilities. Both firms would like to "window dress" their end-of-year financial statements, and to do so they tentativelyplan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts. Which of the statementsbelow best describes the results of these transactions?OA. The transactions would improve Intella's financial strength as measured by its current ratio but lower AWD's current ratio.O B. The transactions would lower Intella's financial strength as measured by its current ratio but raise AWD's current ratio.O C. The transactions would have no effect on the firm' financial strength as measured by their current ratios.O D. The transactions would lower both firm' financial strength as measured by their current ratios.O E. The transactions would improve both firms' financial strength as measured by their current ratios.

Current ratio is one of liquidity ratio being used in business which shows how much current or short…

Answered: Intella's current assets total to $20…

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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The 2020 balance sheet of Osaka's Tennis Shop, Incorporated, showed long-term debt of $2.25 million, and the 2021 balance sheet showed long-term debt of $2.66 million. The 2021 income statement showed an interest expense of $305,000. During 2021, Osaka's Tennis Shop, Incorporated, realized the following: Cash flow to creditors Cash flow to stockholders $105,000 $ 209,000 Suppose you also know that the firm's net capital spending for 2021 was $1.5 million and that the firm reduced its net working capital investment by $55,000. What was the firm's 2021 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Operating cash flow
Dolente Ltd is a small company which designs, manufactures and sells innovative electronic instruments. The directors of the company have discussed the financial statements prepared for the year ended 31st March 2020 and have made the following remarks.“We are surprised to see that we have a loss for the year as our bank balance seems to be healthy and has increased from the 2019 figure”. task: Using the information provided by the cash flow statement, comment on the remarks of the directors on the results for the year
Interest expense for Rhodes Manufacturing was $500,000 in 2018. During 2018, $3.7 million in old debt was repaid and $1.6 million was raised through new borrowing. Dividends of $460,000 were paid and $1.7 million was raised through new share sales. a. Calculate the cash flow to bondholders. Treat interest as a financing flow. (Enter answers in dollar, not in millions of dollar. Use minus sign to enter cash or financing outflows, if any.)
You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company's interest expense for the year ended December 31, 2024. Your accounting group provided you the following information on the company's debt:Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)1. On July 1, 2024, Moonlight Bay issued bonds with a face amount of $ 1,000,000. The bonds mature in 20 years and interest of 7% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 8% Moonlight Bay records interest at the effective rate.2. At December 31, 2023, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $580,000. The annual payment is $100, 000, payable each June 30.3. On January 1, 2024, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $65,000beginning January 1, 2024.…
c.) Bank A has three types of assets: Debenture ($90,000), Mortgage ($75,000), and Loan to the Government ($2000). The bank has Tier 1 capital of $15,000 and Tier 2 capital of $20,000. Calculate Capital adequacy ratio. If the capital adequacy requirement ratio is 8%, does the bank meet the requirement?
Clayton Industries has the following account balances: Current assets Noncurrent assets The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued $ 22,000 Current liabilities 77,880 Noncurrent liabilities stockholders' equity Currently If bonds are issued If stock is issued Current Ratio 2.44 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Bonds Stock to 1 to 1 Debt to Assets Ratio Additional Retained Earnings $ 9,000 50,000 48,888 % % % b. Assume that after the funds are invested, EBIT…
For the year ending 2022, determine the Net New Equity, Change in Net Working Capital, Net Capital Spending and Operating Cash flow. Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders for 2022. Calculate the Dividends per Share and Earnings per Share for each year for Brown Company. Briefly comment on the company’s cash flows for 2022 in light of an expansion plan which will be financed by both debt and equity.
The following footnote appeared in a recent financial statement of Westinghouse Electric :The Corporation considers all investment securities with a maturity of three months or lesswhen acquired to be cash equivalents. All cash and temporary investments are placed with high-credit-quality financial institutions, and the amount of credit exposure to any one fi-nancial institution is limited. At December 31, cash and cash equivalents include restricted funds of $42 million.a. Are the company’s cash equivalents debt or equity securities? How do you know? b. Explain what is meant by the statement that “the credit exposure to any one financial institu-tion is limited.” c. Explain what is meant by the term restricted funds used in the footnote.
Refer to the following financial statements for Kodenko Inc: Prepare forecasts of its income statement, statement of financial position and statement of cash flows for 2020 under the following assumptions:a. All financial ratio remains at 2019 level.b. Kodenko will not record restructuring costs for 2020.c. Taxes payable are at the 2019 level of RM544 million.d. Depreciation expense charged to Selling, general and administrative is RM765million for 2019 and 2018 repectively.e. Gross PPE is RM 12,982 million and RM12,963 million for 2019 and 2018 respectively.f. Projected current maturities of long term debt are RM13 million for 2020.g. Capital expenditure for 2019 and 2018 are RM1,047 and RM783, respectively
Answer ASAP please write the formula used please.
The Stancil Corporation provided the following current information: Proceeds from long-term borrowing $ 13,800 Proceeds from the sale of common stock 5,000 Purchases of fixed assets 27,500 Purchases of inventories 2,600 Payment of dividends 13,800 Determine the total cash flows spent on fixed assets and NWC, and determine the cash flows to investors of the firm. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)
The 2020 balance sheet of Osaka's Tennis Shop, Incorporated, showed long-term debt of $6.5 million, and the 2021 balance sheet showed long-term debt of $6.7 million. The 2021 income statement showed an interest expense of $230,000. During 2021, the company had a cash flow to creditors of $30,000 and the cash flow to stockholders for the year was $85,000. Suppose you also know that the firm's net capital spending for 2021 was $1.50 million and that the firm reduced its net working capital investment by $95,000. What was the firm's 2021 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Operating cash flow

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