Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows: ACME Corporation Wayne EnterprisesCurrent assets:Cash and cash equivalents $ 2,494 $ 541Current investments 125Net receivables 1,395 217Inventory 10,710 8,600Other current assets 773 301Total current assets $15,372 $9,784Current liabilitiesCurrent debt $ 1,321 $ 47Accounts payable 8,871 5,327Other current liabilities 1,270 2,334Total current liabilities $11,462 $7,708Required: 1. Calculate the current ratio for ACME Corporation and Wayne Enterprises. Which company has the better ratio? 2. Calculate the acid-test (quick) ratio for ACME Corporation and Wayne Enterprises. Which company has the better ratio? 3. How would the purchase of additional inventory on credit affect the current ratio? How would it affect the acid-test ratio?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows:
ACME Corporation Wayne Enterprises
Current assets:
Cash and cash equivalents $ 2,494 $ 541
Current investments 125
Net receivables 1,395 217
Inventory 10,710 8,600
Other current assets 773 301
Total current assets $15,372 $9,784
Current liabilities
Current debt $ 1,321 $ 47
Accounts payable 8,871 5,327
Other current liabilities 1,270 2,334
Total current liabilities $11,462 $7,708
Required:
1. Calculate the
2. Calculate the acid-test (quick) ratio for ACME Corporation and Wayne Enterprises. Which company has the better ratio?
3. How would the purchase of additional inventory on credit affect the current ratio? How would it affect the acid-test ratio?
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