A firm has a current ratio of 1. To increase that ratio the firm might ________....
A firm has a current ratio of 1. To increase that ratio the firm might ________.
A. issue bonds and use the proceeds to purchase new equipment
B.hold lower cash balances at the bank and increase holdings of interest−earning marketable securities
C. develop a better inventory management system so the firm doesn't have to hold as many items in inventory at one time
D.take out a long−term bank loan and simultaneously offer customers better credit terms, allowing them to pay their bills more slowly
Homework Answers
Option 'D' is correct
Take out a Long-term bank loan and simultaneously offer customers better credit terms, allowing them to pay their bills, more slowly
Taking a long term loan increases the cash and thereby increasing the current assets. Current Liabilities remains same because long term liability does not form part of current liability.
Current ratio = Current Assets / Current Liabilities
To increase Current ratio either current assets are to be increased or Current liabilities has to be decreased. Long term bank loan increases cash balance. so current ratio will be increased
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A firm has a current ratio of 1. To increase that ratio the firm might ________....
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Background You are an Analyst for the professional service firm, BUSI 1043 LLP. Your firm specializes...
Background
You are an Analyst for the professional service firm, BUSI 1043
LLP. Your firm specializes in providing a wide variety of internal
business solutions for different clients. After 4 months on the
job, you walk into the partner’s office to provide him with your
two week notice. Given your excellent performance over the past few
months, rival professional service firm, BUSI 2083 LLP has provided
you with an offer you cannot refuse by providing you with a
promotion to...
1) A borrower who takes out a loan usually has better information about the potential returns...
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
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True or False? 1) PepsiCo has a higher debt ratio than Chevron (use the latest financial statements on Yahoo). 2) Apple has a higher profit margin than Gilead Science (use the latest financial statements on Yahoo). 3) Even if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm defaults on a scheduled payment. 4) When a firm increases its common stock dividend, it must...
Please help me to answer this question. 1. The ratio of ________ to ________ is an indicator of the quality of a firm's earnings. a. cash flow from operations, net income b. liabilities, assets c....
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debl A firm can increase its intrinsic value by increasing their , and decreasing their 1. (2 total points) What happens to the cost of capital (rd & r) in a firm when additional debt is issued? Why? (4 total points) 2. 3. ABC Inc. is a toy manufacturer with a fixed cost of $250,000. The average price per toy is $2o. Each toy has a variable cost of $12.50. What is the quantity break even for ABC Inc.? (4...
QUESTIONS 1. Complete the 1992 columns of Tables 3 through 6, disregarding for now the projected...
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QUESTION 4 As a barometer of short-term liquidity the current ratio is limited by the nature of its components. All of the following are reasons that this is true except: C A firm could have a high current ratio but not be able to meet demands for cash because inventory is salable only at discounted rices. C The balance sheet is prepared as of a particular date and the actual amount of liquid assets may vary considerably from the date...
Background
You are an Analyst for the professional service firm, BUSI 1043
LLP. Your firm specializes in providing a wide variety of internal
business solutions for different clients. After 4 months on the
job, you walk into the partner’s office to provide him with your
two week notice. Given your excellent performance over the past few
months, rival professional service firm, BUSI 2083 LLP has provided
you with an offer you cannot refuse by providing you with a
promotion to...
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
debl A firm can increase its intrinsic value by increasing their , and decreasing their 1. (2 total points) What happens to the cost of capital (rd & r) in a firm when additional debt is issued? Why? (4 total points) 2. 3. ABC Inc. is a toy manufacturer with a fixed cost of $250,000. The average price per toy is $2o. Each toy has a variable cost of $12.50. What is the quantity break even for ABC Inc.? (4...
QUESTIONS 1. Complete the 1992 columns of Tables 3 through 6, disregarding for now the projected data in the 1993 and 1994 columns. If you are using the spreadsheet model, use it to complete the tables. Be sure you understand all the numbers, as it would be most embarrassing and harmful to your career) if you were asked how you got a particular number and you could not give a meaningful response. 2. Based on the information in the case...
18-1. (Related to Checkpoint 18.1 on page 573) (Measuring firm liquidity) The following table contains current asset and current liability balances for Deere and Company (DE): 2008 2007 2006 1,687,500 ($ thousands) Current assets Cash and cash equivalents Short-term investments Net receivables Inventory Total current assets 2,211,400 0 3,944,200 3,041,800 9,197,400 2,278,600 1,623,300 3,680,900 2,337,300 9,920,100 3,508,100 1,957,300 7,152,900 Current liabilities Accounts payable Short-term/current long-term debt Other current liabilities Total current liabilities 6,562,800 8,520,500 4,666,300 8,121,200 3,186,100 9.969,400 2,766,000 15,921,500...
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