Concept explainers
The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year, or within completion of the operating cycle, is referred to as current ratio. This ratio assesses the liquidity of a company.
Formula of current ratio:
Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In other words, it indicates the number of times the average amount of net accounts receivables collected during a particular period.
Formula of current ratio:
Average collection period:
Average collection period indicates the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average.
Formula of average collection period:
To indicate: whether each transaction will increase (I), decrease (D), or have no effect (NE) for the given ratios.

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Chapter 8 Solutions
FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
- On January 1, Crestview Finance lends a corporate client $195,000 at an annual interest rate of 6.8%. What is the amount of interest revenue that should be recorded for the quarter ending March 31? Answerarrow_forwardWhat is the cost of goods sold for the year?arrow_forwardPlease provide the accurate answer to this General accounting problem using valid techniques.arrow_forward
- Compute the total manufacturing cost assigned to job B-620arrow_forwardWhat is the gross margin percentage ?arrow_forwardJackson, Inc. sponsors a defined-benefit pension plan. The following balance sheet data relates to the plan on December 31, 2018: Plan assets (at fair value), $1,200,000; Accumulated benefit obligation, $1,600,000; Projected benefit obligation, $2,000,000. Contributions of $130,000 were made to the plan during the year. What amount should Jackson report as its pension liability on its balance sheet as of December 31, 2018?arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
