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earnstyle [38]
3 years ago
9

You have just calculated the acid-test ratio for Peak Performance Sporting Goods [acid test ratio = 1.0]. As a loan officer for

the local bank, you are called into your boss's office to interpret the results of this ratio. Which of the following statements best reflects an understanding of these results?A) A company with an acid-test ratio = 1.0 demonstrates the ability to operate very conservatively. The bank should anticipate that this firm will always be able to meet its short-term liabilities.
B) This company is already having problems meeting its short-term liabilities.
C) An acid-test ratio = 1.0 means that this firm has $1.00 in current assets for every $2.00 in current liabilities. Peak Performance is a well-run operation, as long as it can continue to sell off its inventory.
D) An acid-test ratio = 1.0 tells us that without adequate inventory turnover, this company may represent a higher risk. Peak Performance's acid-test ratio shows that the firm maintains $1.00 in current assets for every $1.00 in current liabilities.
Business
1 answer:
Radda [10]3 years ago
4 0

Answer:

D) An acid-test ratio = 1.0 tells us that without adequate inventory turnover, this company may represent a higher risk. Peak Performance's acid-test ratio shows that the firm maintains $1.00 in current assets for every $1.00 in current liabilities.

Explanation:

The acid test ratio is the ratio which depicts the liquidity of the company. It excludes the inventory, prepaid expenses, etc for calculating it

The formula to compute is shown below:

Acid test ratio is

= Quick assets ÷ current liabilities

Therefore according to the given situation, the correct option is d.

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4 years ago
Melanie needs to ensure that readers are able to locate specific sections within a document easily. What should she include in t
frutty [35]

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table of contents

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3 years ago
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Merry Maidens Cleaning generally charges $120 for a detailed cleaning of a normal-size home. However, to generate additional bus
faust18 [17]

Answer:

New price = $108

Explanation:

Given:

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New discount rate = 10% = 10 / 100 = 0.1

Computation of new price for cleaning:

New price = Old price for cleaning (1-New discount rate)

New price = 120 (1-0.1)

New price = 120 (1-0.1)

New price = $108

                           Journal entry

Date    Account Title and Explanation   Debit   Credit

        Cash               A/c Dr.                         $108

         Service Revenue  A/c                           $108

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8 0
3 years ago
DeMagistris Fashion​ Company, based in New York​ City, imports leather coats from​ Acuña Leather​ Goods, a reliable and longtime
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Answer:

$1,333,333.33

Explanation:

Exchange rates (Ps/$)3.50 4.50

New exchange rate (Ps/$)6.00

Less Exchange rate allowable (Ps/$)4.50

= (Ps/$)1.50

Shares of De Magistris' 0.75

Shares of Acuña's..0.75

Top of range 4.50

Add Share 0.75

=5.25

Let Assumed hat 6 months of imports will still be (Ps) $7,000,000

÷ Exchange rate for DeMagistris (Ps/$)5.25

= $1,333,333.33

6 0
4 years ago
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