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3 years ago

Nabors Company reported the following current assets and liabilities for December 31 for two recent years:

Business

1 answer:

Fofino [41]3 years ago

6 0

Answer:

Quick Ratio - Current Year = 1.44

Quick Ratio - Previous Year = 1.447826 rounded off to 1.45

The quick ratio of the business has declined as it has less current assets to pay of each $1 of current liability than it had previous year.

Explanation:

The quick ratio or acid test ratio is a financial ratio that is used to assess the liquidity of a business. It measures the amount of most liquid assets that the business has to pay each $1 of current liability of the business. The most liquid assets of a business are all of its current assets excluding inventory. The formula to calculate the quick ratio is,

Quick ratio = (Current Assets - Inventory) / Current Liabilities

Quick Ratio - Current Year = (660 + 1440 + 3300 - 1080) / 3000

Quick Ratio - Current Year = 1.44

Quick Ratio - Previous Year = (920 + 2050 + 1400 - 1040) / 2300

Quick Ratio - Previous Year = 1.447826 rounded off to 1.45

The quick ratio of the business in previous year was approx. 1.45 which means that the business had $1.45 of most liquid current assets to pay each $1 of current liability while this year, it has $1.44 of current assets for each $1 of current liability. This means that the quick ratio of the business has declined as it has less current assets to pay of each $1 of current liability than it had previous year.

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3 years ago

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Free_Kalibri [48]

Answer:

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3 years ago

You work for an auto manufacturer and distributor. How could you use information systems to

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3 years ago

Kingbird Industries had one patent recorded on its books as of January 1, 2020. This patent had a book value of $249,600 and a r

dimulka [17.4K]

Answer:

The amount patent(s) should be reported on the December 31, 2020, balance sheet, assuming monthly amortization of patents, is $32,300.

Explanation:

This can be calculated as follows:

Patent book value = $249,600

Remaining useful years January 1, 2020 = 8

Remaining useful months of the patents from January 1, 2020 = Remaining useful years January 1, 2020 * 12 8 * 12 = 96

Monthly Patent book value = Patent book value / Remaining useful months = $249,600 = $2,600

Patent book value amortized from January 1, 2020 to December 1, 2020 = Monthly Patent book value * 12 = $2,600 * 12 = $31,200

Legal fee incurred = $93,500

Number of months from January 1, 2020 to December 1, 2020 = 11

Relevant months of legal fee incurred starting from December 1, 2020 = Remaining useful months of the patents from January 1, 2020 - Number of months from January 1, 2020 to December 1, 2020 = 96 - 11 = 85

Monthly legal fee = Legal fee incurred / Relevant months of legal fee incurred starting from December 1, 2020 = $93,500 / 85 = $1,100

Amount to report = Patent book value amortized from January 1, 2020 to December 1, 2020 + Monthly legal fee for December 1, 2020 only = $31,200 + $1,100 = $32,300

Therefore, the amount patent(s) should be reported on the December 31, 2020, balance sheet, assuming monthly amortization of patents, is $32,300.

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3 years ago