Question

1. There are three components in the triple bottom line; people, planet, and profit. Which component do you think is most important? Why? Reply and add to other student’s responses for full credit.

2. Assume a company has a current ratio of 2.0. List two examples of transactions that could cause the current ratio to increase. Also list two examples of transactions that could cause the current ratio to decrease.
Briefly explain everything please

Answer 1

1) The three components in triple bottom line are namely people, planet and profit . One of the components cannot be placed above another as all the three are equally important for a company to sustain in the long run. People involves the employees , labourers and the wider community where a corporation does business . Good people are backbone of any company . Focussing on the environment is equally important. The companies try to reduce ecological footprint as much as possible. Sustainable organisations do not consider profit as diametrically opposite to people and planet and is seen as equally necessary for a business.

No one of them can be given more importance . Without any one the company cannot sustain.

2) Current ratio = Current assets/ Current liabilities = 2 ( given)

Two transactions that can cause it to increase

1) Paying off current liabilities

Eg initial CA= $40000 Cl = $20000 = 2

If $10000 is paid off then 30000/10000= 3

2) Take longe term loan

That would significantly reduce current liability and hence increase current ratio

Two transactions that decrease current ratio

1) When plant is acquired on account fixed asset would increase and current liabilities increase with no effect on current assets

2) amortisation of prepaid expense