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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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.

Expert Solution & Answer

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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

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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.