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3 years ago

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BSO, Inc, has current assets of $1,000,000 and current liabilities of $500,000, resulting in a current ratio of 2.0.Calculate th

e current ratio and determine whether it will increase, decrease, or remain the same.a. Purchased $20,000 of supplies on credit.b. Paid Accounts Payable in the amount of $50,000.c. Recorded $100,000 of cash contributed by a stockholder.d. Borrowed $250,000 from a local bank, to be repaid in 90 days.

1 answer:

Furkat [3]3 years ago

8 0

Answer:

1.96 Decreased; 2.06 Increased; 2.28 Increased; 1.83 Decreased

Explanation:

Let's present it in a table

Current Assets / Current Liabilities = Current Ratio

Beg. 1,000,000 / 500,000 = 2

In A. Current Assets increased and Current Liabilities Increased.

a. 1,020,000 / 520,000 = 1.96 Decreased

In B. Current Assets decreased and Current Liabilities decreased.

b. 970,000 / 470,000 = 2.06 Increased

In C. Current Assets increased and Current Liabilities remained the same.

c. 1,070,000 / 470,000 = 2.28 Increased

In D. Current Assets increased and Current Liabilities Increased.

d. 1,3720,000 / 720,000 = 1.83 Decreased

Current ratio moves when a current asset or current liability moves.

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Explanation:

Annual worth: this will be the annuity payment equivalent to all the cashflow of the investment. Thus the PMT of the net present value

Cash Investment at F0: <em>230,000/2 = 115,000</em>

present value of 7,500 salvage value:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 7,500.00

time 7 years

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$\frac{7500}{(1 + 0.1)^{7} } = PV$

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<u>Then, we need to calculate the present value of the loan discounted at 10%</u>

half the investment is finance: 230,000 / 2 = <em>115,000</em>

Then, this capitalize 2 year at 8% before the first payment:

$Principal \: (1+ r)^{time} = Amount$

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<em />

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$PV \div \frac{1-(1+r)^{-time} }{rate} = C\\$

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