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3 years ago

A firm’s liquidity level decreases when:_______.

Business

1 answer:

katovenus [111]3 years ago

5 0

Answer:

b) inventory is sold on credit.

Explanation:

Liquidity is defined as the a business to use its current assets to settle it's current liabilities.

This is calculated by using the working capital ratio.

Working capital ratio = Current assets ÷ Current liabilities.

Cash and inventory contribute to a business' liquidity.

When inventory is sold on credit, it does not result in immediate increase in cash as payment is in the future. So there is a reduction in the current asset of the company.

A reduction in the numerator of the working capital ratio results in lower value of the ratio (lower liquidity)

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3 years ago

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point

Lilit [14]

Answer:

opportunity cost of producing bananas = 2 pounds of apples per pound of bananas

Explanation:

production possibilities frontier (in pounds):

Apples Bananas

500 1,200

300 1,300

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4 years ago

If a broker puts a for sale sign on aprooperty what must appear on the sign\

Shtirlitz [24]

Explanation:

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3 years ago

Here is the income statement for Skysong, Inc. SKYSONG, INC. Income Statement For the Year Ended December 31, 2017 Sales revenue

Semenov [28]

Answer:

a. The Earnings per share is $2.64 per share

b. The Price-earnings ratio is 5.30 times

c. The Payout ratio is 26.44%

d.The Times Interest earned is 7.76 times

Explanation:

a. In order to calculate the Earnings per share we would have to use the following formula:

Earnings per share = [Net Income - Dividend on preferred stock] / Average outstanding common shares

Average outstanding common shares = [24,700 shares + 37,100 shares]/2 = 30,900 shares

Earnings per share = [$86,600 - $4,900] / 30,900 shares = $2.64 per share

b. In order to calculate the Price earnings ratio we would have to use the following formula:

Price earnings ratio = Market price per share / Earnings per share

Price earnings ratio = $14 / $2.64 = 5.30 times

c. In order to calculate the Payout ratio we would have to use the following formula:

Payout ratio = Dividend / Net Income

Payout ratio = $22,900 / $86,600 = 26.44%

d. In order to calculate the Times Interest earned we would have to use the following formula:

Times Interest earned = Earnings before interest and taxes / Interest Expense

Earnings before interest and taxes = Net Income + Interest Expense + Taxes = $86,600 + $16,700 + $26,400 = $ 129,700

Times Interest earned = $129,700/ $16,700 = 7.76 times

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3 years ago

The person who assists a corporation with real estate investments, usually as an employee and not an independent contractor, is

kakasveta [241]

Answer:

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2 years ago