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vodka [1.7K]
3 years ago
15

The following items are reported on a company's balance sheet: Cash $100,000 Marketable securities 50,000 Accounts receivable (n

et) 60,000 Inventory 70,000 Accounts payable 140,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2
Business
1 answer:
olchik [2.2K]3 years ago
4 0

Answer:

a. 2.00

b. 1.50

Explanation:

The Current and Quick ratios are both liquidity ratios that are used to determine the ability of a company to pay off its current liabilities with current assets.

a. Current Ratio

= Current assets / Current liabilities

= (100,000 + 50,000 + 60,000 + 70,000) / 140,000

= 2.00

b. Quick ratio

= (Current assets - Inventory) / Current liabilities

= (100,000 + 50,000 + 60,000) / 140,000

= 1.50

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Stop and Go has a 4.5 percent profit margin and a 15 percent dividend payout ratio. The total asset turnover is 1.6 and the debt
AVprozaik [17]

Answer:

10.85 percent

Explanation:

Return on equity = 0.045 × 1.60 ×(1 + 0.60) = 0.1152

Sustainable growth = [0.1152 × (1 - 0.15)]/{1 - [.1152 × (1 - 0.15)]} = 10.85 percent

The sustainable growth rate is the rate of growth that a company can expect to see in the long term. Often referred to as G, the sustainable growth rate can be calculated by multiplying a company’s earnings retention rate by its return on equity. The growth rate can be calculated on a historical basis and averaged in order to determine the company’s average growth rate since its inception.

The sustainable growth rate is an indicator of what stage a company is in, during its life cycle. Understanding where a company is in its life cycle is important.

3 0
3 years ago
Adam Smith used the “invisible hand” as a metaphor for the forces that balance a free market. What might be a good metaphor for
7nadin3 [17]
In economics, the invisible hand<span> is a </span>metaphor used<span> by </span>Adam Smith<span> to describe ... Smith </span>may<span> have come up with the two meanings of the phrase from Richard Cantillon ... In this </span>work<span>, however, the idea of the </span>market<span> is not discussed, and the word ... In alternative models, </span>forces<span> which were nascent during Smith's life, such as ... and ....</span>
5 0
3 years ago
Dream, Inc., has debt outstanding with a face value of $6 million. The value of the firm if it were entirely financed by equity
Deffense [45]

Answer:

$650,000

Explanation:

For computing the decrease in the  expected bankruptcy costs, first we have to determine the total firm value in each case which is shown below:

Total firm value = Equity + Debt × corporate tax rate

                          = $17,850,000 + $6,000,000 × 0.35

                          = $17,850,000 + $2,100,000

                          = $19,950,000

Now the total firm value based on market share

= Equity + Debt

= 350,000 shares × $38 + $6,000,000

= $13,300,000 + $6,000,000

= $19,300,000

The difference would be

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= $650,000

5 0
3 years ago
MC Qu. 74 If a firm's forecasted sales are... If a firm's forecasted sales are $238,000 and its break-even sales are $184,000, t
KonstantinChe [14]

Answer:

22.69%

Explanation:

Margin of safety = (forecasted sales -  break-even sales) / forecasted sales

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3 0
2 years ago
A project will produce an operating cash flow of $136,000 a year for three years. The initial cash outlay for equipment will be
pashok25 [27]

Answer:

     NPV  =$ 60,311.80

Explanation:

<em>The net present value (NPV) of a project is the present value of cash inflow  less the present value of cash outflow of the project.</em>

NPV = PV of cash inflow - PV of cash outflow

We can set out the cash flows of the project using the table below:

                                                  0                  1                   2                 3          

Operating cash flow                                136,000     136,000    136,000

Initial cost                              (274,000)

Working capital                     (61,000 )                                          61,000

Salvage value                        <u>               </u>    <u>             </u>      <u>           </u>      1<u>5000  </u>              

Net cashflow                     <u> (335,000)  136,000      136,000      212,000.</u>

PV  inflow= (136000)× (1.1)^(-1) + (136,000× (1.1)^(-2) + (112,000)× (1.1)^(-3)

       =  395,311.80

NPV =395,311.80 -335,000

       =$ 60,311.80

3 0
3 years ago
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