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torisob [31]
3 years ago
10

North Bank is analyzing Belle Corp.'s financial statements for a possible extension of credit. Belle's quick ratio is significan

tly better than the industry average. Which one of the following factors should North consider as a possible limitation of using this ratio when evaluating Belle's creditworthiness?
A. Fluctuating market prices of short-term investments may adversely affect the ratio.
B. Increasing market prices for Belle's inventory may adversely affect the ratio.
C. Belle may need to sell its available-for-sale investments to meet its current obligations.
D. Belle may need to liquidate its inventory to meet its long-term obligations.
Business
1 answer:
Arlecino [84]3 years ago
4 0

Answer:

A) Fluctuating market prices of short-term investments may adversely affect the ratio.

Explanation:

The quick ratio (or acid test) measures a company's ability to pay short term liabilities using its liquid assets. usually the best quick ratio is 1, because it means that your liquid current assets cover completely your current liabilities.

There are two formulas to calculate the quick ratio:

  • quick ratio = (cash + marketable securities + accounts receivables) / current liabilities
  • quick ratio = (current assets - inventory - prepaid expenses) / current liabilities

The quick ratio includes the value of short term investments, and any fluctuation in their price may affect the ratio.

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Elmo Johnson was late on his property tax payment to the county. He owed $7,500 and paid the tax four months late. The county ch
GrogVix [38]

Answer: $250

Explanation:

From the question, we are told that Elmo Johnson was late on his property tax payment to the county and that he owed $7,500 and paid the tax four months late.

We are further told that the county charges an annual penalty of 10%. The amount of the penalty for the four-month period goes thus:

Annual penalty = 10% × $7500

= 0.1 × $7500

= $750

Since he is four months late and there are twelve months in a year, this will be:

= $750 × 4/12

= $750 × 1/3

= $750/3

= $250

8 0
3 years ago
Storico Co. just paid a dividend of $1.50 per share. The company will increase its dividend by 20 percent next year and then red
jeyben [28]

Answer:

The selling price today = $28.536

Explanation:

The question states that D0 is $1.5.

To calculate price, we need to calculate Present value of future dividends along with a terminal value from the time the dividend growth is becoming constant.

The D1 growth will be 20% of D2.

The fall in dividend growth will be 5% till it reaches 5%.

  • P0 = D1 / (1+r)  +  D2 / (1+r)²  +  D3 / (1+r)³  + D4 / r-g
  • Where,
  • r = required rate of return
  • g = growth rate

Thus,

P0 = 1.5*(1.2) / (1+0.15)  +   1.5*(1.2)*(1.15) / (1+0.15)²  +   1.5*(1.2)*(1.15)*(1.1) / (1+0.15)³   +  1.5*(1.2)*(1.15)*(1.1)*(1.05) / (0.15 - 0.05)

P0 = $28.536

4 0
3 years ago
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine-hours best explain the
Paha777 [63]

Answer:

The utilities cost associated with 1,110 machine hours will be $10,505.

Explanation:

High Low method is a way to calculate the variable and fixed cost element of total cost using lowest level of activity and its cost and highest level of activity and its cost.

In this example The Highest activity of Machine hour is in the month of May and Lowest  activity is in February.

Using high low method:

Variable cost =  ( Highest activity cost - Lowest activity cost ) / ( Highest activity - Lowest activity )

Variable cost =  ( Cost in May - Cost in February ) / ( Machine hours in May - Machine Hours in February)

Variable cost =  ( $9,625 - $8,360 ) / ( 950 - 720 )

Variable cost =  $1,265 / 230

Variable cost =  $5.50 per machine hour

Fixed Cost = $8360 - ( 720 x $5.5) = $8360 - $3960 = $4,400

Utility cost of 1110 units = $4,400 + ( 1,110 x 5.5 ) = $4400 + $6,105 = $10,505

5 0
3 years ago
The federal speedy trial act allows for the dismissal of charges when the prosecution does not seek indictment within ________ d
Natali5045456 [20]

The Speedy Trial Act of 1974 allows for the dismissal of charges when the prosecution does not seek indictment in 30 days of arrest, or within 70 days after indictment when a trial does not begin. The act has time limits for the completion of different stages of a federal criminal prosecution. 

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3 0
3 years ago
Having the authority to define their own tasks makes it likely that workers will ______.
MArishka [77]

Answer: C, be more productive

Explanation: I just took the topic test on edgenuity.

7 0
3 years ago
Read 2 more answers
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