Financial Accounting
4th Edition
ISBN: 9780134125053
Author: Kemp, Robert S., Waybright, Jeffrey.
Publisher: Pearson Education,
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Textbook Question
Chapter 7, Problem 28AE
Quick ratio and
Consider the following data
| COMPANY | A | B | C | D |
| Cash........................................... | $ 8,700 | $ 6,600 | $ 1,800 | $10,300 |
| Short-term Investments............. | 6,700 | 3,100 | 1,200 | 4,900 |
| Net Receivables.......................... | 13,400 | 11,000 | 5,400 | 13,500 |
| Total current assets................... | 31,800 | 26,900 | 9,300 | 32,400 |
| Current Liabilities....................... | 20,100 | 10,200 | 4,500 | 37,000 |
Requirements
- 1. Calculate the quick assets and the quick ratio for each company (round your final answers to two decimal places).
- 2. Calculate the current ratio for each company (round your final answers to two decimal places).
- 3. Which company should be concerned about its liquidity?
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Students have asked these similar questions
Suppose you take out a five-year car loan for $14000, paying an annual interest rate of 4%. You make
monthly payments of $258 for this loan.
Complete the table below as you pay off the loan.
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Amount still owed
4% Interest on
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(Remember to divide
by 12 for monthly
interest)
Amount of monthly
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toward paying off the
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0
14000
1
2
3
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LO
5
6
7
8
9
10
10
11
12
What is the total amount paid in interest over this first year of the loan?
Suppose you take out a five-year car loan
for $12000, paying an annual interest rate
of 3%. You make monthly payments of $216
for this loan.
mocars
Getting started (month 0): Here is how the process works. When you buy the car, right at month 0, you owe
the full $12000. Applying the 3% interest to this (3% is "3 per $100" or "0.03 per $1"), you would owe
0.03*$12000 = $360 for the year. Since this is a monthly loan, we divide this by 12 to find the interest
payment of $30 for the month. You pay $216 for the month, so $30 of your payment goes toward interest
(and is never seen again...), and (216-30) = $186 pays down your loan.
(Month 1): You just paid down $186 off your loan, so you now owe $11814 for the car. Using a similar
process, you would owe 0.03* $11814 = $354.42 for the year, so (dividing by 12), you owe $29.54 in interest
for the month. This means that of your $216 monthly payment, $29.54 goes toward interest and $186.46
pays down your loan.
The values from above are included…
Suppose you have an investment account that earns an annual 9% interest rate, compounded monthly. It
took $500 to open the account, so your opening balance is $500. You choose to make fixed monthly
payments of $230 to the account each month.
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Months
Amount in account (Principal)
9% Interest
gained
(Remember to
divide by 12 for
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2
3
$500
$230
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$230
$230
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$230
$230
10
6
$230
$230
8
9
$230
$230
10
$230
11
$230
12
What is the total amount gained in interest over this first year of this investment plan?
Chapter 7 Solutions
Financial Accounting
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8APCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Prob. 35BECh. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Prob. 47APCh. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Prob. 1FACh. 7 - Prob. 1IACh. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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