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(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 Incorporation A.
To Compute: The current ratio for the Incorporation W.
To Identify: The conclusion of the Incorporations A and W for liquidity ratios can be drawn from above calculated ratios.
(b-1)
To Compute: The debt to asset ratio for Incorporation A.
To Compute: The debt to asset ratio for Incorporation W.
(b-2)
To Compute: The times interest earned ratio for the Incorporation A.
To Compute: The times interest earned ratio for the Incorporation W.
To Identify: The conclusion of the Incorporations A and W long-run solvency can be drawn from above calculated ratios.
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Chapter 10 Solutions
FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
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