All categories

4 years ago

Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio:

Business

1 answer:

soldier1979 [14.2K]4 years ago

6 0

Answer:

The Current ratio is 3.14 and Acid test ratio is 0.81

Explanation:

The formula of current ratio is:

Current Ratio = Current Assets / Current Liabilities

= (Cash + Short term investment + Accounts receivable + Inventory + Prepaid expenses) / (Accounts Payable + Other current payables)

= ($39,970 + $9,200 + $40,500 + $241,000 + $16,830) / ($87,900 + $ 22,600)

= $347,500 / $110,500

= 3.14

The formula of Acid-Test is:

Acid-Test Ratio = Quick Assets / Current Liabilities

= (Cash + Short term investment + Accounts receivable) / (Accounts Payable + Other current payables)

= ($39,970 + $9,200 + $40,500) / ($87,900 + $ 22,600)

= $89,670 / $110,500

= 0.81

You might be interested in

What is the specific purpose of eating healthy?

Serhud [2]

The purpose of eating healthy is because our food contains minerals, nutrients and vitamins absolutely necessary for a healthy body. These nutrients provide us with energy and keep everything in our body working properly.

5 0

3 years ago

Read 2 more answers

20 examples of tangible wasting assets

Doss [256]

Answer:

Current assets include inventory, while fixed assets include such items as buildings and equipment. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the marketplace.

Explanation:

7 0

3 years ago

After hearing test results from her doctor, erin realized her weight was really impacting her health. with respect to the proces

Yuri [45]

With high opinion to the procedure of altering a habit, janice is at awareness step. The consciousness denotes to the individual awareness of your sole interpretations, commemorations, emotional state, feelings and surroundings. The conscious involvements are continuously instable and altering.

4 0

3 years ago

A firm's information policy includes rules that lay out who is responsible for updating and maintaining the information in a dat

melisa1 [442]

Answer:

True

Explanation:Information policy can be seen a singular set of policies made public by an organization to make sure that all her IT users in the domain or network of the organization comply with guidelines and regulation related to the protection of the information stored online/digitally at any point within the organization's boundaries of authority or in the network.

6 0

3 years ago

Suppose Stark Ltd. just issued a dividend of $1.59 per share on its common stock. The company paid dividends of $1.25, $1.33, $1

Harlamova29_29 [7]

Answer:

The answer is below

Explanation:

a) The dividend growth rate is given as D2/D1 - 1

Year Dividend Growth rate

1 $1.25

2 $1.33 ($1.33/ $1.25 - 1) 6.4%

3 $1.4 ($1.4/$1.33 - 1) 5.26%

4 $1.51 ($1.51/$1.4 -1) 7.86%

The arithmetic average growth rate is the average of all the growth rates.

Arithmetic average growth rate = (6.4% + 5.26% + 7.86%) / 3 = 6.51%

The cost of annuity = (cost of common stock / Selling stock price) * 100% + Average growth rate

The cost of annuity = ($1.59 / $40) * 100% + 6.51% = 10.49%

b) The geometric growth rate is given as:

geometric average growth rate =

$(\frac{D_n}{D_o} )^{\frac{1}{n} }-1\\D_n=1.51,D_o=1.25,n=3\\\\Geometric\ growth\ rate=\frac{1.51}{1.25}^{1/3}-1=6.5\%$

The cost of annuity = ($1.59 / $40) * 100% + 6.5% = 10.48%

7 0

3 years ago