Concept explainers
Videos
(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.
Want to see the full answer?
Check out a sample textbook solution
Chapter 10 Solutions
FIN.ACCT-TOOLS F/DECI.MAKERS-TEXT+WILEY+
- Financial Accountingarrow_forwardApple Technology Corp., has an annual net income of $12.4 billion, the revenue of $93.7 billion, and a cost of goods sold of $42.5 billion. If the balance sheet amount shows $5.8 billion of inventory how many weeks of supply does Apple Technology Corp. hold?arrow_forwardSterling Equipment Ltd. purchased machinery for $80,000 with a salvage value of $5,000 and a 6-year useful life. The company initially used the straight-line method, but after two years, switched to the double-declining balance method. What is the depreciation expense for Year 3?arrow_forward
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub