FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
9th Edition
ISBN: 9781119595724
Author: Kimmel
Publisher: WILEY C
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Chapter 10, Problem 10.5EYCT

(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, and debt to equity ratio, and more.

To Compute: The current ratio for the Company B.

To determine

To Compute: The current ratio for the Company BN.

(b)

To determine

To Compute: The debt to asset ratio for Company B.

To determine

To Compute: The debt to asset ratio for Company B.

To determine

To Compute: The times interest earned ratio for the Company B.

To determine

To Compute: The times interest earned ratio for the Company BN.

(c)

To determine

To Discuss: The relative liquidity and solvency of Company B and BN.

To determine

To identify:  Is the Company B looks like bankruptcy.

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