The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company. Introduction: Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities. Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio. Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm. Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit. Total Assets Turnover Ratio : Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Question

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Answer 1

Question

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

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Anti-Pandemic Pharma Co. Ltd. reports the following information inits income statement:Sales = $5,250,000;Costs = $2, 173,000;Other expenses = $187,400;Depreciation expense = $79,000;Interest expense= $53,555;Taxes = $76,000;Dividends = $69,000.$136,700 worth of new shares were also issued during the year andlong-term debt worth $65,300 was redeemed.a) Compute the cash flow from assetsb) Compute the net change in working capital

Question 3 Footfall Manufacturing Ltd. reports the following financial information at the end of the current year: Net Sales $100,000 Debtor's turnover ratio (based on 2 net sales) Inventory turnover ratio 1.25 Fixed assets turnover ratio 0.8 Debt to assets ratio 0.6 Net profit margin 5% Gross profit margin 25% Return on investment 2% Use the given information to fill out the templates for income statement and balance sheet given below: Income Statement of Footfall Manufacturing Ltd. for the year ending December 31, 20XX (in $) Sales 100,000 Cost of goods sold Gross profit Other expenses Earnings before tax Tax @50% Earnings after tax Balance Sheet of Footfall Manufacturing Ltd. as at December 31, 20XX (in $) Liabilities Amount Assets Amount Equity Net fixed assets Long term 50,000 Inventory debt Short term debt Debtors Cash TOTAL TOTAL

Answer 2

Question

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

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Answer 3

Question

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Expert Solution & Answer

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Answer 4

Question

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Answer 6

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Answer 7

Chapter 3, Problem 3.15P

a)

Summary Introduction

To discuss:

The current ratio, quick ratio, inventories turnover, average collection period and the total assets turnover for each company.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Answer 8

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Answer 9

b)

Summary Introduction

To determine:

Liquidity position.

Introduction:

Current ratio: Current ratio which is calculated by dividing current assets from current liabilities shows the ability of the corporation to pay of its current liabilities.

Quick ratio: Quick ratio is used to determine the company’s capability to satisfy dues using only liquid assets. Inventory is excluded from this ratio to show liquidity in better manner and it is also known as acid-test ratio.

Answer 10

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Answer 11

c)

Summary Introduction

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

Answer 12

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Answer 13

d)

Summary Introduction

To determine:

Analyzing inventory turnover and total assets turnover.

Introduction:

Inventory turnover: Inventory turnover which reflects the number of times average inventory is converted into sales during a period is an asset management ratio that tells the manager how effectively they are managing the firm.

Total Assets Turnover Ratio: Total assets turnover ratio examines how effectively the asset of a firm is utilized.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 3.1 - Prob. 3.1RQ Ch. 3.1 - Describe the purpose of each of the four major...Ch. 3.1 - Prob. 3.3RQ Ch. 3.1 - Prob. 3.4RQ Ch. 3.2 - With regard to financial ratio analysis, how do...Ch. 3.2 - What is the difference between cross-sectional and...Ch. 3.2 - Prob. 3.7RQ Ch. 3.2 - Prob. 3.8RQ Ch. 3.3 - Under what circumstances would the current ratio...Ch. 3.3 - In Table 3.5, most of the specific firms listed...

To determine: Analyzing average collection period of receivables. Introduction: Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.

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Chapter 3 Solutions

To determine:

Analyzing average collection period of receivables.

Introduction:

Average collection period: Average collection period evaluates the number of days required by the firm to collect its credit.