Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company. To compute: Current ratio Given info: Total current assets and current liabilities.
Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company. To compute: Current ratio Given info: Total current assets and current liabilities.
Solution Summary: The author explains how financial ratios are used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.
Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.
Chapter 17, Problem 17.3BPE
A)
To determine
Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.
To compute:Current ratio
Given info: Total current assets and current liabilities.
B)
To determine
Acid-Test Ratio: This ratio denotes that this ratio is a more rigorous test of solvency than the current ratio. It is determined by dividing quick assets and current liabilities. The acceptable acid-test ratio is 0.90 to 1.00. Use the following formula to determine the acid-test ratio:
Acid Ratio=Quick assetsCurrentliabilities
Quick Assets are those assets that are most liquid. The examples of quick assets include cash and bank balances, marketable securities, and sundry debtors.
To calculate: Acid-test ratio
Given info: Current assets and current liabilities
On January 3, 2020, Salma Industries acquired equipment for $420,000. The estimated useful life of the equipment is 6 years or 100,000 machine hours, with a residual value of $30,000. What is the book value of the asset on December 31, 2021, if Salma Industries uses the straight-line method of depreciation?
Willow & Sons Ltd. has $312,000 in accounts receivable on February 1. Budgeted sales for February are $820,000. Willow & Sons expects to sell 25% of its merchandise for cash. Of the remaining 75% of sales on account, 60% are expected to be collected in the month of sale and the remainder the following month. What are the February cash collections from sales? Provide answer
Crescent Corp. sells merchandise to Primex Ltd. for $9,800 with credit terms of 2/10, net 30. Primex returns $1,500 worth of merchandise due to defects and sends a check within the discount period. What is the amount of the check?
Chapter 17 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th