Ratio analysis It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company. Following are the two measures of liquidity: 1. Current ratio : Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1. 2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable . 3. Working capital : Total current assets minus total current liabilities are the working capital of a company. To explain: The representation of “gift cards”, which is listed as current liabilities.

Question

What best represents the accounting equation of this company?

Answer 1

Question

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

C.

To determine

To compute: The current ratio for each company.

D.

To determine

To compute: The quick ratio for each company.

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

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What best represents the accounting equation of this company?

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Clonex Labs, Inc., uses the weighted average method in its process costing system. The following data are available for one department for October: Percent Completed Units Materials Conversion Work in process, October 1 49,000 95% 60% Work in process, October 31 38,000 70% 47% The department started 394,000 units into production during the month and transferred 405,000 completed units to the next department. Required: Compute the equivalent units of production for October.

Answer 2

Question

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

C.

To determine

To compute: The current ratio for each company.

D.

To determine

To compute: The quick ratio for each company.

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

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Answer 3

Question

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

C.

To determine

To compute: The current ratio for each company.

D.

To determine

To compute: The quick ratio for each company.

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

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Answer 4

Question

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

C.

To determine

To compute: The current ratio for each company.

D.

To determine

To compute: The quick ratio for each company.

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

C.

To determine

To compute: The current ratio for each company.

D.

To determine

To compute: The quick ratio for each company.

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

Answer 6

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

Answer 7

Chapter 10, Problem 4ADM

A.

To determine

Ratio analysis

It is the financial analysis tool for measuring the profitability, liquidity, capability and overall performance of a company.

Following are the two measures of liquidity:

1. Current ratio: Current ratio is used to determine the relationship between current assets and current liabilities. The ideal current ratio is 2:1.

2. Quick ratio: Quick ratio measures the immediate debt paying capacity of a business, which can be measured by dividing quick assets by the current liabilities. Quick assets represent cash, readily marketable securities, and accounts receivable.

3. Working capital: Total current assets minus total current liabilities are the working capital of a company.

To explain: The representation of “gift cards”, which is listed as current liabilities.

Answer 8

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

Answer 9

B.

To determine

To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

Answer 10

C.

To determine

To compute: The current ratio for each company.

Answer 11

C.

To determine

To compute: The current ratio for each company.

Answer 12

D.

To determine

To compute: The quick ratio for each company.

Answer 13

D.

To determine

To compute: The quick ratio for each company.

Answer 14

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

Answer 15

E.

To determine

To compare: The two companies results of current ratio and quick ratio.

Answer 16

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Answer 27

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Solution Summary: The author explains how credit card loans can be considered as quick assets for Company C's computation of the quick ratios.

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To indicate: Whether the “credit card loans” can be considered as part of quick assets for Company C’s computation of the quick ratios.

To compute: The current ratio for each company.

To compute: The quick ratio for each company.

To compare: The two companies results of current ratio and quick ratio.

Chapter 10 Solutions