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mylen [45]
3 years ago
11

Liquidity ratios are used to measure a firm's ability to meet its obligations as they come due. Two of the most commonly used li

quidity ratios are the: (1) Current ratio and (2) Quick, or acid test, ratio. The current ratio is the most commonly used measure of solvency. Its equation is:
Business
1 answer:
marshall27 [118]3 years ago
3 0

Answer:

Current Ratio= Current Assets/ Current Liabilities

Explanation:

Current Ratio= Current Assets/ Current Liabilities

The current ratio is an important measure of a company's ability to pay its short term obligations. It is defined as current assets divided by current liabilities.

Current assets are cash and other resources that are expected to be sold or used within one year or the company's operating cycle , whichever is longer. Examples are cash, short term investments , accounts receivable, short term notes receivable, goods for sale ( called merchandise or inventory) and prepaid expenses. Prepaid expenses are usually listed last because they will not be converted to cash ( instead they are used).

Current liabilities are obligations due to be paid or settled within one year of operating cycle, whichever is longer. they are usually settled by paying out current assets such as cash . Current liabilities often include accounts payable , notes payable, wages payable, taxes payable, interest payable and unearned revenues. Also any portion of a long term liability due to be paid within one year or the operating cycle whichever is longer is a current liability.

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At a growth (interest) rate of 8 percent annually, how long will it take for a sum to double? To triple? Use Appendix A for an a
Yanka [14]

Answer:

n =   ㏒ P ÷ ㏒ (1.08)

Explanation:

Compound interest rate

A = P × (1 + r)^{n}

where

P = principal amount (the initial amount you borrow or deposit)

r  = annual rate of interest (as a decimal)

A = amount of money accumulated after n years, including interest.

n  =  number of years

Since we want the principle amount to double i.e., A = 2P

put this in above equation

2P = P × (1 + r)^{n}

divide both sides by P, we get

P = (1 + r)^{n}

put r = 0.08

P = (1 + 0.08)^{n}

P = (1 .08)^{n}

Taking log on both sides

㏒ P =㏒ (1 .08)^{n}

㏒ P = n ㏒ (1.08)

n =   ㏒ P ÷ ㏒ (1.08)

8 0
3 years ago
Kraven Corp. borrows $100,000 by signing on a 1-year, 8% promissory note from General Finance Company and assigns $120,000 of it
Aleks [24]

Answer and Explanation:

The journal entry is shown below:

Cash Dr $98,800

Finance charge Dr ($120,000 × 1%) $1,200

       To Liability - Financing Arrangement $100,000

(being receipts of cash is recorded)

Here cash and finance charge is debited as it increased the assets and expenses and liability is credited as it also increased the liabilities. Also, the cash & expenses contains normal debit balance and liabilities contains normal credit balance

6 0
3 years ago
How do I start a plan
miskamm [114]

Answer:

plan

Explanation:

4 0
3 years ago
Read 2 more answers
Suppose Kenji decides to buy 100 shares of NanoSpeck stock.Which of the following statements are correct? A) The price of his sh
Ivahew [28]

Answer:

A) The price of his shares will rise if NanoSpeck issues additional shares of stock.

C) Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Kenji's shares to decline.

Explanation:

if a demand for kanji's is more than its supply, the share prices increase. if the sellers of a particular stock are more than its buyers, the share price decreases. if the company is earning much profit, the share price will rise.

5 0
3 years ago
Activity Levels Used to Compute Overhead Rates Reggie Wilmore has just started a new business-building and installing custom gar
Olenka [21]

Answer:

1. $3.18 and $2.55

2. expected annual activity

Explanation:

The computation of the predetermine overhead rate is shown below:

1. For Expected actual activity, it is

= (Overhead for the coming year) ÷ (completed jobs × direct labor hours)

= ($15,600) ÷ (140 jobs × 35 direct labor hours)

= $3.18

And, for  Theoretical activity, it is

= (Overhead for the coming year) ÷ (completed jobs × direct labor hours)

= ($15,600) ÷ (175 jobs × 35 direct labor hours)

= $2.55

2. Based on the predetermined overhead rate, the expected actual activity has highest predetermined overhead rate as compared to the theoretical activity

So the Reggie should use the same

5 0
3 years ago
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