Concept Introduction
Cash Ratio: Cash Ratio is a financial liquidity ratio that measures the ability of an organization to meet its short-term obligations with only cash and cash equivalents. It is measured as a ratio of total cash and cash equivalents to current liabilities.
Acid-Test Ratio: Acid-Test Ratio is a financial liquidity ratio that measures the ability of an organization to meet its short-term obligations with its quick assets. The quick assets usually include cash, marketable securities and accounts receivables. It is measured as a ratio of quick assets to current liabilities.
Debt Ratio: Debt ratio is a financial ratio that shows the percentage of total assets that is financed by the total liabilities of a company.
Debt Equity Ratio: Debt Equity Ratio is a financial leverage ratio that shows what proportion of debt an organization is using to finance its assets relative to shareholder’s equity. It is measured as a ratio of total debt to total
1.
To Compute: The given ratios that are current ratio, cash ratio, acid-test ratio, debt ratio and debt to equity ratio for 2016 and 2015.
2.
To Evaluate: The company’s ability to pay its current liabilities and total liabilities.
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Chapter 17 Solutions
ACCOUNTING PRINCIPLES 122 5/16 >C<
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