In: Accounting
Accounts Receivable | $20,000 ($30,000 in the previous year) |
Total Current Assets | $300,000 |
Investments | $50,000 |
Total Assets | $1,000,000 |
Total Current Liabilities | $100,000 |
Total Long-Term Debt | $400,000 |
Total Liabilities | $500,000 |
Net Income | $300,000 |
Total Revenue (Sales) | $900,000 |
Industry average: Current ratio | 1 |
Industry average: Solvency ratio | 2.5 |
Industry average: Profit margin ratio | 35% |
(1) What is the Current Ratio of this company; and (2) who would prefer a lower current ratio?
A. (1) 2; (2) Managers
B. (1) 3; (2) Owners
C. (1) 2; (2) Owners
D. (1) 1; (2) Creditors
What is the Accounts Receivable Turnover (ART) ratio of this company?
A. 36 times
B. 81.82 times
C. 90 times
D. 45 times
What is the Average Collection Period of this company?
A. 10.14 days
B. 12.25 days
C. 9.6 days
D. 30.1 days
(1) What is the Solvency Ratio of this company; and (2) who would prefer a higher solvency ratio?
A. (1) 2; (2) Managers
B. (1) 1; (2) Creditors
C. (1) 2; (2) Creditors
D. (1) .5; (2) Manager
(1) What is the Profit Margin of this company; and (2) who would prefer a higher profit margin ratio? (Round to the nearest whole number)
A. (1) 35%; (2) Owner
B. (1) 33%; (2) All (Owners, Creditors, and Managers)
C. (1) 33%; (2) Manager
D. (1) 45%; (2) All (Owners, Creditors, and Managers)
Hi,
I have solved this question by using the various formulas as required by the question. There are various for solvency ratio, as per given data total debts to total assets ratio, is prefered over others.
Any doubts are welcome.