Question

Describe in 200 words Benedictine Monastery of Admont Current Ratio and Debt to Asset Ratio, please type

Answer 1

The current ratio is a firm's liquidity ratio. It is calculated as current assets of the firm divided by the firm's current liabilities. It helps to predict the company's capability to meet its short term obligations. The current ratio for Benedictine Monastery is 23 million euros (current assets) divided by 7.5 million euros (current liabilities) and it comes out to be 3.066. It means that for every 1 euro which the monastery has credit of, it has 3.06 euro available for it.

The debt to asset ratio for a country is calculated as the amount of company's total liability divided by the amount of company's total assets.

The debt to asset ratio is basically the percent of company's total assets which have been financed by the creditors.

It indicates the the level of financial leverage which the company possesses in the economy.

Any debt to asset ratio ranging between 0 to 40% is considered as a good debt ratio indicating strong financial structure and low risk while anything greater than 40% implies a higher amount of risk and a weak financial structure.

In case of Benedictine Monastery of Admont, their debt to asset ratio will be 27 million euro (total liability) divided by 37 million euro (total asset) , amounting to a debt to asset ratio of approximately 73%. So, almost 73% of the firm's assets are financed by creditors.