You work for a supplier that sells furniture to retailers.Company B is a customer and...

You work for a supplier that sells furniture to retailers. Company B is a customer and your company has extended them trade credit (made them a loan.) You are concerned that Company B may default. Their inventory does not seem to be selling, and they do not appear to have a lot of other assets that they can sell to pay back their debt to your company. You decide that the best ratio to address the question is the ______________

Expert Solution

The best ratio to check whether the company will be able to pay its current liabilities on time is Current ratio.

Current ratio is part of liquidity ratio. Liquidity measures how quickly a company can repay its debts. They also show how quickly and easily a company is in generating cash to repay creditors quickly, either in an emergency situation or in the course of normal business.

The current ratio measures company's ability to generate cash to meet its short-term financial commitments (current liabilities) on time.

Current assets includes cash, inventory, accounts receivables, etc and current liabilities includes creditors, accounts payables, etc.

As a supplier, one needs to check the the profitability ratio, Inventory turnover ratio and creditors turnover ratio also.

Creditors turnover ratio or accounts payable turnover ratio is also a important ratio to be considered. It is a ratio that measures the speed with which a company pays its suppliers. If the turnover ratio declines from one period to the next, this indicates that the company is paying its suppliers more slowly.

jeff jeffy answered 2 years ago

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at...

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at its retail location. The store currently orders 40 mattresses whenever the inventory level drops to 20. The cost to hold 1 mattress in inventory for one day is $0.75. The cost cost to place an order with the supplier is $80, and inventory is 30 mattresses. The daily demand probabilities are shown in the following table: Daily Demand Probability 2 0.08 3 0.14 4...

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store....

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store. After looking around the store, Brittney approaches Susan to buy an expensive wooden chair for $1,200. Susan gives Brittney a written contract for the purchase of the chair, which Brittney reads. While Brittney is reading the contract, Susan tells Brittney, “If you sign now, we can also deliver to you a free luxury wooden table to go with the chair.” Brittney tells Sarah, “Oh...

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store....

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store. After looking around the store, Brittney approaches Susan to buy an expensive wooden chair for $1,200. Susan gives Brittney a written contract for the purchase of the chair, which Brittney reads. While Brittney is reading the contract, Susan tells Brittney, “If you sign now, we can also deliver to you a free luxury wooden table to go with the chair.” Brittney tells Sarah, “Oh...

Criticize the Sandcone Theory of operations performance objectives. If you are a global furniture supplier, how...

Criticize the Sandcone Theory of operations performance objectives. If you are a global furniture supplier, how will you rank the five performance objectives, and discuss reasons for the ranking.

Think of a company you know – whether as a customer, employee, supplier, etc. -- which...

Think of a company you know – whether as a customer, employee, supplier, etc. -- which is earning substantial profits in spite of the 2020 Covid pandemic and resulting economic downfall. How would each of the theories of justice in economic distribution – utilitarian, libertarian, or egalitarian – apply?

You run a small furniture business. You sign a deal with a customer to deliver up...

You run a small furniture business. You sign a deal with a customer to deliver up to 600 chairs, the exact number to be determined by the customer later. The price will be $ 130 per chair up to 500 chairs, and above 500 , the price will be reduced by $ 0.25 per chair (on the whole order) for every additional chair over 500 ordered.

Suppose that there are three Suppliers (Supplier A, Supplier B, Supplier C) and we are interested...

Suppose that there are three Suppliers (Supplier A, Supplier B, Supplier C) and we are interested to evaluate the performance of the suppliers by using AHP method. Some of the criteria for supplier selection process can be defined as follows: Cost, Quality, and Timeliness. We would like to add more factors as criteria to the three above mentioned criteria. What else factor can be defined as criteria? Define at least two more criteria. By considering only the above three criteria...

Customer Corp contracts with Supplier Corp to manufacture parts in a facility on Customer Corp’s property....

Customer Corp contracts with Supplier Corp to manufacture parts in a facility on Customer Corp’s property. Customer Corp designed the facility and stipulates its specifications. Supplier Corp owns the facility and leases the land from Customer Corp. Customer Corp specifies how many parts it needs and when it needs the parts to be available. Supplier Corp operates the machinery and makes all operating decisions including how and when the parts are to be produced, as long as it meets the...

Herman, the owner of a furniture store, and Walt, owner of a website that sells furniture,...

Herman, the owner of a furniture store, and Walt, owner of a website that sells furniture, spoke on the telephone about the possibility of Walt selling an Acme brand table to Herman. They orally agreed that Walt would sell Herman the table for $750 to be delivered in one month. After finishing the phone conversation, Walt wrote a note to Herman saying, “This is to confirm our contract for the sale of one Acme brand marble table for $750. (signed)...

You work for Entertainment Supplies Pty Ltd – a supplier of entertainment products to the industry....

You work for Entertainment Supplies Pty Ltd – a supplier of entertainment products to the industry. The following transactions relate to dealings with Fairy Floss Trading Pty Ltd over the month of August 2015. At the start of August, this debtor already owed $200. Purchases Aug 2 Invoice 765 $120 plus $12 GST Aug 9 Invoice 791 $160 plus $16 GST Aug 15 Invoice 823 $140 plus $14 GST Aug 24 Invoice 845 $200 plus $20 GST Aug 30 Invoice...

Question

You work for a supplier that sells furniture to retailers.Company B is a customer and...

Solutions

Expert Solution

Related Solutions

Furniture Depot orders a certain brand of mattress from its supplier and sells the mattresses at...

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store....

Susan runs a store that sells furniture. One day, Brittney, a customer, walks in the store....

Criticize the Sandcone Theory of operations performance objectives. If you are a global furniture supplier, how...

Think of a company you know – whether as a customer, employee, supplier, etc. -- which...

You run a small furniture business. You sign a deal with a customer to deliver up...

Suppose that there are three Suppliers (Supplier A, Supplier B, Supplier C) and we are interested...

Customer Corp contracts with Supplier Corp to manufacture parts in a facility on Customer Corp’s property....

Herman, the owner of a furniture store, and Walt, owner of a website that sells furniture,...

You work for Entertainment Supplies Pty Ltd – a supplier of entertainment products to the industry....