Explain why working capital is required.
Indicate two possible ratios measuring working capital and
outline what does it mean if their outcome is positive
Define ratio analysis,What are different types of ratios ,also
explain with formulas following ratios:
a)Liquidity Ratios
b)Solvency Ratios
c)Profitability Ratios
A. In learning about ratios, we could simply study the different
types or categories of ratios,
or we could use ratios to answer some important questions about a
firm's operations. We
prefer the latter approach and have chosen the following four
questions as a map in using
financial ratios:
1. How liquid is the firm?
2. Is management generating adequate operating profits on the
firm's assets?
3. How is the firm financing its assets?
4. Are the owners (stockholders) receiving...
A) Identify the components of working capital and the accounting
issues related to these components.
(B) The IASB has issued pronouncements on some of the issues
affecting working capital; Discuss two of these pronouncements and
state if, in your opinion, the issues have been resolved.