A tenant entered into a two-year apartment lease with a landlord on July 1. Rent was specified in the lease to be $850 per month
1 answer:
You might be interested in
Answer:
(a) Current ratio = 2.746
(b) Acid-test ratio = 1.423
(c) Debt to assets ratio = 47.48%
(d) Return on assets = 6.15%
Explanation:
For Balance Sheet, pleased see attached file.
Current Ratio = Current Asset / Current Liabilities
Current Ratio = 212,800 / 77,500
Current Ratio = 2.746
Acid-Test Ratio = (Current Assets – Inventories) / Current Liabilities
Acid-Test Ratio = (212,800 – 102,500) / 77,500
Acid-Test Ratio = 1.423
Debt to Asset ratio = (Total Liabilities / Total Assets)*100
Debt to Asset ratio = (205,500 / 432,800)*100
Debt to Asset ratio = 47.48%
ROA = (Net Income / Total Assets)*100
ROA = (26,600 / 432,800)*100
ROA = 6.15%
The Current Ratio is a liquidity measure that shows the ratio between current asset and current liabilities. It tells how many dollars of the current asset are per dollar of current debts, that gives an idea of the company`s ability to perform its debts.
The Quick Ratio is also a liquidity indicator, but using its most liquid assets, to pay its current liabilities at maturity. The inventory, although it is a current asset, is not considered, since it cannot be converted into cash in a very short term.
The difference between the Quick Ratio and the Current Ratio, implies that while both are measures of the company's ability to pay its debts, the quick ratio also tells how much the company depends on its inventory to get that objective.
The Debt to Assets ratio is a financial ratio that shows how much of a company assets is owed to its creditors.
ROA is a financial indicator that gives an idea as to how efficient a company's management is at using its assets to generate earnings, by determining how profitable a company is relative to its total assets.
Answer:
It should replace the old machine. In the current accounting period.
Explanation:
We need to perform a relevant cost analysis:
Keep the machine:
F0 = $0
F1 = $1500 maintenance
F2 = $3,000 maintenance
F3 = $6,000 maintenance
F4 = $12,000 maintenance
F5 =$24,000 maintenance + 250 resale value
replace the machine:
F0 = -12,000 purchase + 4,000 sale of old machine = -800
F1 = $900 maintenance
F2 = $900 maintenance
F3 = $900 maintenance
F4 = $900 maintenance
F5 =$900 maintenance + 1,500 resale value
As revenues are the same for each machine, we ignore them. We will only focus on the cost each machine generate:
We solve for the present worth of each machine with a discount rate of 12%
As the present worth of the new machine is lower, the best decision for the company is to purchase the new machine and sale the old machine.
Delaying this will incur in higher maintenance cost (1,500 - 900)
and a lower recovery value (4,000 - 2,000)
As there is no cost saving for delaying the purchase, it should be made immediately.