FIN.ACCT-TOOLS F/DECI.MAKERS-TEXT+WILEY+
FIN.ACCT-TOOLS F/DECI.MAKERS-TEXT+WILEY+
9th Edition
ISBN: 9781119598312
Author: Kimmel
Publisher: WILEY C
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Chapter 10, Problem 10.4EYCT

(a)

To determine

Liquidity ratio

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 current ratio, working capital ratio, acid test ratio and more.

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, debt to equity ratio, and more.

To Calculate: The working capital and current ratio of Company H and Company HD.

To determine

To Discuss: The relative liquidity of company H and HD.

(b)

To determine

To Compute: The debt to asset ratio and Times interest earned ratio for Company H and Company HD.

To determine

To Discuss: The relative solvency of Company H and Company HD.

(c)

To determine

To Compute: The return on assets and profit margin of Company H and Company HD.

To determine

To Discuss: The relativity profitability of Company H and Company HD.

(d)

To determine

To Discuss: The debt to assets ratio before and after lease obligations of Company HD.

To determine

To Discuss: The implications of operating lease obligations.

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Chapter 10 Solutions

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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License