Current ratio : A part of liquidity ratios , current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period. The formula to calculate current ratio is, Current Ratio = Current Assets Current Liabilities Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities. Current Assets : Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets. To identify: The reasons due to which 2:1 might not be the good current ratio.

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Answer 1

Question

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

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Answer 2

Question

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

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Answer 3

Question

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

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Answer 4

Question

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

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Answer 5

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

Answer 6

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

Answer 7

Chapter 13, Problem 5DQ

To determine

Current ratio: A part of liquidity ratios, current ratio reflects the ability to oblige the short term debts of a company. It is calculated based on the current assets and current liabilities; a company has in an accounting period.

The formula to calculate current ratio is,

Current Ratio=Current Assets Current Liabilities

Current liability: Every company has some debts or liabilities which need to be paid in less than one year or during current accounting period. Those debts or liabilities are called current liabilities.

Current Assets: Every company has some assets which need to be convertible in less than one year or during current accounting period. Those assets are called current assets.

To identify: The reasons due to which 2:1 might not be the good current ratio.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 13 - Prob. 1MCQ Ch. 13 - Prob. 2MCQ Ch. 13 - Prob. 3MCQ Ch. 13 - Prob. 4MCQ Ch. 13 - Prob. 5MCQ Ch. 13 - Prob. 1DQ Ch. 13 - Prob. 2DQ Ch. 13 - Prob. 3DQ Ch. 13 - Prob. 4DQ Ch. 13 - Prob. 5DQ

Solution Summary: The author explains that current ratio reflects the ability to oblige the short term debts of a company based on current assets and current liabilities.

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