Concept explainers
(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 and working capital of Company G for the year 2017.
(b)
To Compute: The current ratio and working capital of Company G, if the company used $3,000 cash to pay off $3,000 of accounts payable for the year 2017.
(c)
To Compute: The debt to assets ratio using total liabilities and total assets of Company G for the year 2017.
To Compute: The times interest earned ratio using earnings before interest, and taxes and interest expenses for the year 2017.
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Chapter 10 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
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