Financial Accounting, Student Value Edition (4th Edition)
4th Edition
ISBN: 9780134114811
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Textbook Question
Chapter 7, Problem 40BE
Quick ratio and
Consider the following data:
COMPANY | A | B | C | D |
Cash.......................................... | $ 9,200 | $ 6,000 | $2,000 | $10,600 |
Short-term Investments............ | 7,200 | 2,400 | 1,400 | 5,500 |
Net Current Receivables............ | 12,100 | 10,800 | 4,900 | 13,500 |
Total Current Assets.................. | 32,500 | 22,600 | 8,700 | 31,500 |
Current Liabilities...................... | 16,000 | 8,800 | 4,500 | 36,000 |
Requirements
- 1. Calculate the quick assets and the quick ratio for each company.
- 2. Calculate the current ratio for each company.
- 3. Which company should be concerned about its liquidity?
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Gold Company's comparative balance sheet and income statement for last year appear below:
Β
Statement of Financial Position
Β
Β
Ending
Beginning
Β
Β
Balance
Balance
Β
Cash...........................................................
$Β 70,000
$Β 38,000
Β
Accounts receivable..................................
76,000
52,000
Β
Inventory....................................................
24,000
42,000
Β
Prepaid expenses.......................................
8,000
16,000
Β
Long-term investments..............................
260,000
210,000
Β
Plant and equipment..................................
530,000
510,000
Β
Accumulated depreciation.........................
(Β 398,000)
(Β 350,000)
Β
Total assets................................................
$570,000
$518,000
Β
Β
Β
Β
Β
Accounts payable.......................................
$Β 32,000
$Β 54,000
Β
Accruedβ¦
(Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) LO 6McClain Companyβs condensed and adapted balance sheet at December 31, 2018, follows:(In millions)Total current assets....................................................... $15.9Property, plant, equipment, and other assets................. 16.2$32.1Total current liabilities.................................................. $ 9.6Total long-term liabilities.............................................. 5.5Total shareholdersβ equity............................................. 17.0$32.1Assume that during the first quarter of the following year, 2019, McClain completed the following transactions:a. Earned revenue of $2.8 million, on account.b. Borrowed $7.0 million in long-term debt.c. Paid half of the current liabilities.d. Paid selling expense of $0.6 million.e. Accrued general expense of $0.8 million. Credit General Expense Payable, a currentliability.f. Purchased equipment for $4.6 million, paying cashβ¦
Best Industries is considering an investment project that has the following cash flows:Year 0β¦β¦β¦β¦β¦ $ -1,200Year 1β¦β¦β¦β¦β¦β¦. 200Year 2β¦β¦β¦β¦β¦β¦.. 200Year 3β¦β¦β¦β¦β¦β¦.. 800Year 4β¦β¦β¦β¦β¦β¦β¦ 300The companyβs discount rate for such calculations is 10%
Β
1. For Best Industries what is the projectβs IRR?a. 10.00%b. 11.92%c. 22.75%d. 8.40%
2. For Best Industries what is the NPV?a. $153b. $ -46.94c. $375.44d. $ -153.06
3. Internal rate of return is also:a. Yieldb. Rate of return c. Discount rate that makes the NPV equal to zerod. All of the above
Chapter 7 Solutions
Financial Accounting, Student Value Edition (4th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8APCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Prob. 35BECh. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Prob. 47APCh. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Prob. 1FACh. 7 - Prob. 1IACh. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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