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ololo11 [35]
3 years ago
11

Airline Accessories has the following current assets: cash, $93 million; receivables, $85 million; inventory, $173 million; and

other current assets, $9 million. Airline Accessories has the following liabilities: accounts payable, $80 million; current portion of long-term debt, $26 million; and long-term debt, $14 million. Based on these amounts, calculate the current ratio and the acid-test ratio for Airline Accessories. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)
Business
1 answer:
prohojiy [21]3 years ago
6 0

Answer:

See below

Explanation:

1. The current ratio is the sum of current assets divided by current liabilities. It used to measure the ability of the airlines accessories to meet its short term obligation due within a year

Current ratio = $93 million + $85 million + $9 million / $80 million + $26 million

Current ratio = $187 million / $106 million

Current ratio = 1.76:1

Current ratio = 1.76 times

2. Acid test ratio. This measure liquidity but with adjustment for risky current assets i.e Inventory

Acid test ratio = Current assets - Inventories / Current liabilities

Acid test ratio = ($187 million - $173 million) / $106 million

Acid test ratio = $14 million / $106 million

Acid test ratio = 0.13:1

Acid test ratio = 0.13 times

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2 years ago
Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and dividends of $30,000. When Income Summary is clos
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Answer:

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Big-Mouth Frog Corporation Calculation for Retained earnings

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Splish Corporation has retained earnings of $707,000 at January 1, 2020. Net income during 2020 was $1,428,500, and cash dividen
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Explanation:

Statement of retained earning represent the changes in retained earning balance during the year and accumulated beginning balance of the period and Ending balance as well. It deals with all the adjustment in retained earning like net income transfer  fro the year, dividend paid during the year etc.

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