Conservatism ANALYSIS Liquidity is being able to pay current debts Working Capital = CA - CL Current Ratio CA/CL Acid-test Ratio aka Quick Ratio = (Cash + Current investments +A/R)/CL --does not include inventory or prepaid-assets --uses assets that can be easily converted to cash Practice UA, Inc., shows the following balance sheet accounts; IDENTIFY the CURRENT assets & liabilities: Assets Liabilities Cash Accounts receivable Land Short term investments PPE, net Inventory Intangible assets Other current $50,000 Note payable due in six months 30,000 Accounts payable 200,000 Bond Payable 70,000 Payroll taxes payable 1,250,000 Note payable due in 18 months 55,000 Current portion of Long Term Debt 45,000 Deferred revenue $25,000| 20,000 1,000,000 15,000 75,000 10,000| 5,000 50,000 5,000 Long Term Debt Determine total CURRENT Assets: Determine Total CURRENT Liabilities: Calculate working capital: Calculate the current ratio: %24
Conservatism ANALYSIS Liquidity is being able to pay current debts Working Capital = CA - CL Current Ratio CA/CL Acid-test Ratio aka Quick Ratio = (Cash + Current investments +A/R)/CL --does not include inventory or prepaid-assets --uses assets that can be easily converted to cash Practice UA, Inc., shows the following balance sheet accounts; IDENTIFY the CURRENT assets & liabilities: Assets Liabilities Cash Accounts receivable Land Short term investments PPE, net Inventory Intangible assets Other current $50,000 Note payable due in six months 30,000 Accounts payable 200,000 Bond Payable 70,000 Payroll taxes payable 1,250,000 Note payable due in 18 months 55,000 Current portion of Long Term Debt 45,000 Deferred revenue $25,000| 20,000 1,000,000 15,000 75,000 10,000| 5,000 50,000 5,000 Long Term Debt Determine total CURRENT Assets: Determine Total CURRENT Liabilities: Calculate working capital: Calculate the current ratio: %24
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 26BE
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