All categories

3 years ago

Compute and Interpret Liquidity and Solvency Ratios

Business

1 answer:

strojnjashka [21]3 years ago

3 0

Answer:

See answers below

Explanation:

1. Compute current ratio

Current ratio(2016) = Current assets / Current liabilities

= $6,594,351 / $5,827,005

= 1.13:1

Current ratio(2017) = Current assets / Current liabilities

= $6,905,075 / $7,674,670

= 0.89:1

Compute quick ratio

Quick ratio (2016) = Cash + Net receivables / Current liabilities

= $3,726,549 + $499,142 / $5,827,005

= $4225691 / $5827005

= 0.72:1

Quick ratio (2017) = Cash + Net receivables / Current liabilities

= $3,701,247 + $515,381 / $7,674,670

= $6,905,075 / $7,674,670

= 0.55:1

b. Compute debt to equity ratio

Debt to equity (2016) = Total liabilities / Stockholder's equity

= $16,750,167 / $6,247,242

= 2.68:1

Debt to equity (2017) = Total liabilities / Stockholder's equity

= $23,022,980 / $5,965,725

= 3.86:1

Compute times interest earned ratio

Times interest ratio(2017) = Earning before interest and income tax / Interest expense

• Please note that in 2017, loss before income taxes ($2,209,032) , hence no ratio is computed

c. Compute the cash burn rate for 2017.

Cash burn rate (2017) = Opening cash balance - Closing cash balance / Months

= $3,726,549 - $3,701,247 / 12

= $2,108

You might be interested in

What is one example of a planned economy?

Daniel [21]

Answer:

socialist economy

Explanation:

A planned economy is a system where the government or the central authority makes all major economic decisions. The government decides on the type and quantities of goods to produce and for whom to produce. In the planned economy, factors of production belong to the government. Manufacture of goods and services is motivated by service to the community, not profits.

A socialist economy is a good example of a planned economy. Just like in a planned economy, a socialist economy is characterized by heavy government involvement. The state controls the factors of production. Public service is the reason for economic production, while consumers do not have the liberty to choose products.

6 0

3 years ago

Establishing a 1%/10 Net 30 term would be considered a benefit to a favorite customer and should typically be offered after they

Elodia [21]

The statement is false. It would be an advantage to both the client and the organization. This would mean if the client needs a markdown from the provider they would need to pay the receipt inside 10 days to get the rebate, and this would then enable the organization to get their cash speedier.

6 0

4 years ago

When workers stop working until management meets certain conditions, the event is called a _______?

TiliK225 [7]

When workers stop working until management meets certain conditions, the event is called a Strike.

Strikes are usually performed by the workers to put their unfulfilled demands in front of the management and workers intent to continue the strike until their demands are fulfilled or other remedies are given which satisfy the workers.

Hence the correct answer is <u>Strike</u>

5 0

4 years ago

Heather is sixteen but looks much older. she goes into a jewelry store and buys a diamond bracelet with the money she has been s

brilliants [131]

D is the right answer I suppose

6 0

4 years ago

Smidt Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorp

alexira [117]

Answer:

The solution to this issue can be defined as follows: