(a)
Liquidity ratio measures the short-term capacity of a company to pay its maturing obligations and to meet unanticipated requirements for cash. Liquidity ratios are
Solvency ratio
Solvency ratio measures the capacity of a company to sustain over a long period of time. Solvency ratios are debt to assets ratio, time interest earned ratio, and debt to equity ratio, and more.
To Compute: The current ratio for the Company CS.
To Compute: The current ratio for the Corporation VF.
To Identify: The conclusion of the Company CS and Corporation VF for liquidity ratios can be drawn from above calculated ratios.
(b-1)
To Compute: The debt to asset ratio for Company CS.
To Compute: The debt to asset ratio for Corporation VF.
(b-2)
To Compute: The times interest earned ratio for the Company CS.
To Compute: The times interest earned ratio for the Corporation VF.
To Identify: The conclusion of the Company CS and Corporation VF long-run solvency can be drawn from above calculated ratios.
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Chapter 10 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
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