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trapecia [35]
3 years ago
10

Assuming an acid-test ratio of 1.0, how will the purchase of inventory with cash affect the ratio?

Business
1 answer:
docker41 [41]3 years ago
6 0

Answer:

C) Decrease the acid-test ratio

Explanation:

The quick ratio is also called acid test ratio. It is a liquidity ratio that measures level of liquid assets of a business.

That is the amount of cash or near cash assets it has to settle it's current debt.

Mathematically

Quick ratio = (Current assets - Inventory) ÷ Current liabilities

If cash (current asset) is used to buy Inventory. Cash will reduce and inventory will increase.

The value of (Current asset - Inventory) reduces.

As the numerator in the ratio reduces, the quick ratio also reduces.

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7 0
11 months ago
Tom Gettback buys 100 shares of Jobnson Walker stock for $87.00. per share and a 3-mont Johnson Walker put option with an exerci
Bad White [126]

Answer:

b. $200 loss is the correct option

Explanation:

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7 0
2 years ago
Consider two firms producing smartphones. one uses a highly automated robotics process, while the other uses human workers on an
anastassius [24]
A. Which Firm will have Higher Profits in a Recession Period ?
During a recession period trade and industries are unsuccessful and there is allot of unemployment. During the period supply in the market and level of output in the company are likely to be  low. Robotic automated process seems to be relatively cheap under high production output in a firm. Also the cost of maintenance of machinery is quite high which the firm can`t cater for during the period. In this period human workers are more recommended as the cost of production will be accounted for due to small numbers of employees where the cost of wages and salaries is quite low.
B. Which Firm will have a Higher Profit During a Boom?
During a boom the industry experiences a period of economic success as demand in the market is high. Automated robotics process are machines and carry out their work with allot of efficiency. Compared to human beings they are relatively faster and more efficient. This will will help the industry meet its high level of production target. They also reduce the cost of production as their maintenance cost is low under large scale production. Human workers seem expensive during this period because cost of wages and salaries is subject per-head.
The Firm with a Higher Beta.
The automated robotics firm will have a higher beta  this is because the output will be high leading to increased supply and sale for better profitability. The robots will also function as an asset to the firm increasing the net worth to the company.
7 0
3 years ago
he following information pertains to Benedict Company. Assume that all balance sheet amounts represent average balance figures.T
ra1l [238]

Answer:

b. 14.0%

Explanation:

NET INCOME  

Sales  $ 100.000

Net Income  $ 25.000

Preferred Stock  -$ 4.000

Net Income to Stockholders' equity—common $ 21.000   14%

Net Income to Stockholders         $ 21.000

                                                      ===========  =   14%

Stockholders' equity—common    $ 150,000

5 0
3 years ago
If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, y
AlexFokin [52]

Answer:

It would be external costs

Explanation:

7 0
3 years ago
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