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2 years ago

Quick Ratio

Business

1 answer:

Igoryamba2 years ago

3 0

Answer:

2015 - Quick ratio = 0.52

2016 - Quick ratio = 0.52

Explanation:

The quick ratio is a measure of how well a company can meet its short-term financial liabilities.

It is also known as the acid-test ratio.

It can be calculated as follows: (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.
The simplest formula is

Quick ratio Formula

(Current assets - stock) ÷ current liabilities - this will be used in the calculations.

Current assets:

Cash and other assets that are expected to be converted to cash within a year.

Current liabilities: Current liabilities are a company's short-term financial obligations that are due within one year or within a normal operating cycle.

Workings:

2015 - Quick ratio:

Quick ratio = (Current assets - stock) ÷ current liabilities

Quick ratio = ($2,400 - $800) ÷ $3,050

Quick ratio = 0.52 (answer)

2016 - Quick ratio:

Quick ratio = (Current assets - stock) ÷ current liabilities

Quick ratio = ($2,300 - $650) ÷ $3,150

Quick ratio = 0.52 (answer)

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3 years ago

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2 years ago

Which of the following reflect the balances of prepayment accounts prior to adjustment?

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2 years ago

What impression does it give if you are text messaging or listening to music while waiting to be called into an interview?

mylen [45]

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Anyways, Hope this somehow helps!

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2 years ago

Ramble On Co. wishes to maintain a growth rate of 8 percent a year, a debt-equity ratio of 0.37, and a dividend payout ratio of

Delvig [45]

Answer: 16.55%

Explanation:

Profit margin is the amount of earnings that a company has left when every expenses and costs have been deducted.

From the information given, firstly, we calculate the return on equity. This will be:

= Growth rate /(1 + Growth rate) × Retention ratio

= 8% / (1 + 8%) × 46%

= 0.08/(1 + 0.08) × 0.46

= 0.08/1.08 × 0.46

= 0.08/0.4968

= 0.1610

= 16.10%

Return on equity, ROE = 16.10%

We then calculate the profit margin. This will be:

= ROE / Asset turnover × Equity Multiplier

where,

Equity Multiplier = 1 + debt-equity ratio

= 1 + 0.37 = 1.37

Profit margin = ROE / Asset turnover × Equity Multiplier

= 16.10% / {(1/1.41) × 1.37}

= 16.10% / 0.71 × 1.37

= 0.1610 / 0.9727

= 0.1655

Profit margin = 16.55%

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2 years ago