Section 2:
Assume the following Balance Sheet for a company:
BALANCE SHEET
ASSETS
Cash $ 5,000
Accounts Receivable $125,000
Inventory $200,000
Land $70,000
Buildings $200,000
Less: Accumulated Depreciation $100,000
Total Assets $500,000
LIABILITIES AND EQUITY
Accounts Payable $100,000
Income Tax Payable $50,000
Mortgage Loan $200,000
Common Stock $100,000
Retained Earnings $50,000
Total Liabilities and Equity $500,000
Compute the current ratio for this company.
Group of answer choices
3.25
2.20
3.30
2.17
Using the same Balance Sheet from the prior question, compute the total debt ratio.
Group of answer choices
0.70
0.80
0.90
0.60
A company has its inventory turnover increase from 5 to 10. Which of the following will definitely cause that change?
Group of answer choices
Days sales in inventory goes up
None of the above
Inventory goes up, with cost of goods sold remaining the same
Cost of goods sold goes up, with inventory remaining the same
A company's sales amount increases. Which of the following statements is most correct regarding the ratio Days Sales in Receivables?
Group of answer choices
Days sales in receivables will go up if accounts receivable stays the same
Days sales in receivables will go down if accounts receivable stays the same
None of the above are correct
Days sales in receivables will stay the same if accounts receivable stays the same
Section 2:
1] Compute the current ratio for this company. = (5000+125000+200000)/(100000+50000) = 330000/150000 = 2.20
Group of answer choices
2.20
2] Using the same Balance Sheet from the prior question, compute the total debt ratio = (100000+50000+200000)/500000 = 0.70
Group of answer choices
0.70
3] A company has its inventory turnover increase from 5 to 10. Which of the following will definitely cause that change?
Group of answer choices
Cost of goods sold goes up, with inventory remaining the same
4] A company's sales amount increases. Which of the following statements is most correct regarding the ratio Days Sales in Receivables?
Group of answer choices
Days sales in receivables will go down if accounts receivable stays the same
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