Homework Answers
Solution:
(a)
Current Ratio (Vallante)= Current assets/current liabilities = 7,200/5,400 = 1.33 times
Quick Ratio (Vallante)= (Current assets-inventories)/current liabilities = (7,200-3,168)/5,400 = 0.75 times
Current Ratio (Gaia)= Current assets/current liabilities = 11,200/6,750 = 1.66 times
Quick Ratio (Gaia)= (Current assets-inventories)/current liabilities = (11,200-4,928)/6,750 = 0.93 times
(b)
Gaia has a higher current ratio and quick ratio than Vallante, thus it has a better ability to meet its short-term liabilities than vallante.
If a company's current liabilities are increasing faster than current assets, it means that current ratio is falling and hence, the liquidity position is weakening
Quick assets are current assets excluding inventory. Inventories are excluded because they are not very liquid and reliable. If a company has a current ratio less than 1 but a significantly higher quick ratio, it thus means that the difference between the two ratios is because of inventories and that the company is heavily dependent on sale of its inventory to meet the short-term obligations.
Therefore, based on above all three statements are true.
Add Answer to:
Gaia Vallante Gaia Vallante Assets Liabilities & Equity Current assets: Current liabilities: Cash 4,592 Accounts receivable...
Assets $ Liabilities $ Current Assets Current Liabilities Cash 12,000 Accounts payable 28,500 Cash at bank...
Assets $ Liabilities $ Current Assets Current Liabilities Cash 12,000 Accounts payable 28,500 Cash at bank 7,000 Wages payable 7,000 Accounts receivable 35,000 Taxes payable 12,000 Inventory 30,500 Interest payable 15,000 Prepayments 3,300 Total current assets 87,800 Total current liabilities 62,500 Investments 25,000 Long-Term Liabilities Bank loan 335,000 Notes payable 15,000 Long-term liabilities 350,000 Property, Plant, and Equipment Total Liabilities 412,800 Land and building 156,000 Equipment 1,85,000 Less: Depreciation (63,000) 278,000 Stockholders’ Equity Intangible Assets Common stock 100,000 Goodwill 120,000...
Assets Current Assets Cash Accounts receivable Liabilities and Stockholders' Equity Current liabilities Accounts payable 640,000 Notes...
Assets Current Assets Cash Accounts receivable Liabilities and Stockholders' Equity Current liabilities Accounts payable 640,000 Notes payable to banks 120,000 150,000 ($ less Accrued wages allowance for doubtful accounts of $10,000) 1,170,000 80,000 1,190,000 Inventory Taxes Owed Total current liabilities Long-term debt 1,620,000 $ 020, TO Total current assets Land Plant and equipment ($2,330,000 less accumulated depreciation 1,400,000 4,610,000 Stockholders' equity Common stock ($1 par, 610,000 shares authorized, 580,000 outstanding) Retained earnings Total stockholders' equity $ Total liabilities and equity...
Assets 2018 Liabilities 2018 Cash and Cash Equivalents 63,000 Current Liabilities 40,000 Short-term Investments 3,000 Long-term...
Assets 2018 Liabilities 2018 Cash and Cash Equivalents 63,000 Current Liabilities 40,000 Short-term Investments 3,000 Long-term Liabilities 120,000 Inventory 21,000 Total Liabilities 160,000 Accounts Receivables 20,000 Total Current Assets 107,000 Total Owners' Equity 597,000 Fixed Assets 650,000 Total Assets 757,000 What is the firm’s current ratio and quick ratio in this order? 1.58; 2.68 2.68; 1.58 1.58; 2.15 2.68; 2.15
Balance Sheet December 31s (Millions of dollars) Scramouche Opera N&B Equipment Scramouche Opera Company Company Company...
Balance Sheet December 31s (Millions of dollars) Scramouche Opera N&B Equipment Scramouche Opera Company Company Company Liabilities Current liabilities N&B Equipment Company Assets Current assets Cash $861 $553 Accounts $0 payable Accounts 315 203 Accruals 190 receivable Inventories 1,012 924 $2,100 594 $1,350 1,075 $1,265 Total current $1,012 assets Notes payable Total current liabilities Long-term bonds Total debt Net fixed assets 1,547 $2,812 1,238 $2,250 Net plant and 1,650 1,650 equipment Common equity Common stock $610 328 $488 262 Retained...
The most recent data from the annual balance sheets of Free Spirit Industries Inc. and LeBron...
The most recent data from the annual balance sheets of Free Spirit Industries Inc. and LeBron Sports Equipment Inc. are as follows: Balance Sheet December 31 (Millions of dollars) LeBron Sports Free Spirit LeBron Sports Equipment Inc. Industries Inc. Equipment Inc. Free Spirit Industries Inc. Assets Liabilities Current assets Current liabilities Cash $5,740 $3,690 Accounts $0 $0 payable Accounts 2,100 1,350 Accruals 1,266 0 receivable Inventories 6,160 3,960 Notes payable 7,171 6,750 Total current 14,000 9,000 Total current 8,437 6,750...
ssignment 04 - Analysis of Financial Statements 2. Liquidity ratios Аа д Most firms borrow money...
ssignment 04 - Analysis of Financial Statements 2. Liquidity ratios Аа д Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short- funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? Long-term lenders Short-term lenders The most recent data from the annual balance sheets of N&B Equipment Company and Jing Foodstuffs Inc. are as follows: Jing Foodstuffs Inc....
Most firms borrow money to finance some of their assets, and most will choose to borrow...
Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short-term funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? Long-term lenders Short-term lenders The most recent data from the annual balance sheets of Fitcom Corporation and Scramouche Opera Company are as follows: Fitcom Balance Sheet December 31" (Millions of dollars) Scramouche Opera Fitcom Scramouche Opera Company Corporation Company...
Balance Sheet Assets Current Assets Cash Accounts receivable Inventories Total current assets Liabilities Current Liabilities $47...
Balance Sheet Assets Current Assets Cash Accounts receivable Inventories Total current assets Liabilities Current Liabilities $47 Accounts payable 23 Total current liabilities $40 40 86 Long-Term Liabilities Long-Term Assets Net property, plant, and equipment Total long-term assets 170 164 Long-term debt Total long-term 164 liabilities 170 Total Assets 250 210 Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity 250 The balance sheet for a small firm is shown above. All amounts are in thousands of dollars What is this...
6. Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . ....
6. Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Accounts payable . . . . . . . . . . . . . . . . . . . . . 41 Accounts receivable . . . . . . . . . . . . . ....
Assets 2017 2018 2018 Current assets Cash Accounts receivable Inventory $ 24,236 14,348 27,892 $ 26,000...
Assets 2017 2018 2018 Current assets Cash Accounts receivable Inventory $ 24,236 14,348 27,892 $ 26,000 17,100 29.000 $ 72,100 Liabilities and Owners' Equity 2017 Current liabilities Accounts payable $ 25,084 Notes payable 19,000 Other 13,471 $ 29,000 12,700 18,300 Total $ 66,476 Total $ 57,555 $ 60,000 $ 87,698 Long-term debt $ 88,000 S 45.000 Owners' equity Common stock and paid-in surplus Accumulated retained earnings $ 45,000 219,616 244,302 Fixed assets Net plant and equipment $343,695 $364 900 Total...
Assets Current Assets Cash Accounts receivable Liabilities and Stockholders' Equity Current liabilities Accounts payable 640,000 Notes payable to banks 120,000 150,000 ($ less Accrued wages allowance for doubtful accounts of $10,000) 1,170,000 80,000 1,190,000 Inventory Taxes Owed Total current liabilities Long-term debt 1,620,000 $ 020, TO Total current assets Land Plant and equipment ($2,330,000 less accumulated depreciation 1,400,000 4,610,000 Stockholders' equity Common stock ($1 par, 610,000 shares authorized, 580,000 outstanding) Retained earnings Total stockholders' equity $ Total liabilities and equity...
Balance Sheet December 31s (Millions of dollars) Scramouche Opera N&B Equipment Scramouche Opera Company Company Company Liabilities Current liabilities N&B Equipment Company Assets Current assets Cash $861 $553 Accounts $0 payable Accounts 315 203 Accruals 190 receivable Inventories 1,012 924 $2,100 594 $1,350 1,075 $1,265 Total current $1,012 assets Notes payable Total current liabilities Long-term bonds Total debt Net fixed assets 1,547 $2,812 1,238 $2,250 Net plant and 1,650 1,650 equipment Common equity Common stock $610 328 $488 262 Retained...
The most recent data from the annual balance sheets of Free Spirit Industries Inc. and LeBron Sports Equipment Inc. are as follows: Balance Sheet December 31 (Millions of dollars) LeBron Sports Free Spirit LeBron Sports Equipment Inc. Industries Inc. Equipment Inc. Free Spirit Industries Inc. Assets Liabilities Current assets Current liabilities Cash $5,740 $3,690 Accounts $0 $0 payable Accounts 2,100 1,350 Accruals 1,266 0 receivable Inventories 6,160 3,960 Notes payable 7,171 6,750 Total current 14,000 9,000 Total current 8,437 6,750...
ssignment 04 - Analysis of Financial Statements 2. Liquidity ratios Аа д Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short- funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? Long-term lenders Short-term lenders The most recent data from the annual balance sheets of N&B Equipment Company and Jing Foodstuffs Inc. are as follows: Jing Foodstuffs Inc....
Most firms borrow money to finance some of their assets, and most will choose to borrow some long-term funds and some short-term funds. Which group of lenders would put greater emphasis on a firm's liquidity ratio when evaluating a potential borrower? Long-term lenders Short-term lenders The most recent data from the annual balance sheets of Fitcom Corporation and Scramouche Opera Company are as follows: Fitcom Balance Sheet December 31" (Millions of dollars) Scramouche Opera Fitcom Scramouche Opera Company Corporation Company...
Balance Sheet Assets Current Assets Cash Accounts receivable Inventories Total current assets Liabilities Current Liabilities $47 Accounts payable 23 Total current liabilities $40 40 86 Long-Term Liabilities Long-Term Assets Net property, plant, and equipment Total long-term assets 170 164 Long-term debt Total long-term 164 liabilities 170 Total Assets 250 210 Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity 250 The balance sheet for a small firm is shown above. All amounts are in thousands of dollars What is this...
Assets 2017 2018 2018 Current assets Cash Accounts receivable Inventory $ 24,236 14,348 27,892 $ 26,000 17,100 29.000 $ 72,100 Liabilities and Owners' Equity 2017 Current liabilities Accounts payable $ 25,084 Notes payable 19,000 Other 13,471 $ 29,000 12,700 18,300 Total $ 66,476 Total $ 57,555 $ 60,000 $ 87,698 Long-term debt $ 88,000 S 45.000 Owners' equity Common stock and paid-in surplus Accumulated retained earnings $ 45,000 219,616 244,302 Fixed assets Net plant and equipment $343,695 $364 900 Total...
Most questions answered within 3 hours.
-
Would You expect the analysis produced by the Legislative
Analyst’s Office to be more or less...
asked 11 minutes ago -
How configuring websites to use a common NFS share could
strengthen business continuity efforts
asked 12 minutes ago -
Arrange the following aqueous solutions in order of increasing
boiling point: 0.25 m NaCl (sodium chloride)...
asked 13 minutes ago -
calculate the mass of forsterite (Mg2SiO4) that contains a
million (1.00•10^6) oxygen
asked 36 minutes ago -
A heat engine has an efficiency of 0.48. Initially,
the engine performs net work W per...
asked 26 minutes ago -
identify the effect on the financial statement on the
following senarios:
b) the clients business mainly...
asked 23 minutes ago -
Whenever two Apollo astronauts were on the surface of the Moon,
a third astronaut orbited the...
asked 33 minutes ago -
Suppose that Marriott’s production process is characterized by
constant returns to scale at all output levels....
asked 33 minutes ago -
If a customer places a buy order for one millisecond only on an
electronic limit order...
asked 41 minutes ago -
An aqueous solution of perchloric acid is
standardized by titration with a 0.101 M solution
of...
asked 50 minutes ago -
Huckster Corporation purchased land on January 1, 20X1, for
$24,000. On June 10, 20X4, it sold...
asked 48 minutes ago -
A 2400-kg airplane pulls two gliders, the first of mass 330 kg
and the second of...
asked 59 minutes ago