On December 31, 2021, Big River Company had $1 million of current assets and $900,000 of current
Question:
On December 31, 2021, Big River Company had $1 million of current assets and $900,000 of current liabilities. On the same day, Small Fry Company had $200,000 of current assets and $100,000 of current liabilities. Calculate the working capital and current ratio for both companies and compare the results. Which liquidity measure is more relevant?
Step by Step Answer:
Working capital Current assets Current liabilities Big River Working capital 1000000 90...View the full answer
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
Students also viewed these Business questions
-
On December 31, 2014, Big River Company had $1 million of current assets and $900,000 of current liabilities. On the same day, Small Fry Company had $200,000 of current assets and $100,000 of current...
-
On December 31, 2017, Big River Company had $1 million of current assets and $900,000 of current liabilities. On the same day, Small Fry Company had $200,000 of current assets and $100,000 of current...
-
The following current items, listed in alphabetical order, are taken from the consolidated balance sheets of Starwood Hotels & Resorts Worldwide, Inc. as of December 31, 2008, and Marriott...
-
Products are 1. Lip gloss or lipstick with SPF 2. Custom facial sheets you can make online or in store pickup and have it send to your home based on your needs 3. A foundation sunscreen Price Provide...
-
* Find Z in the network of Fig. 9.62, given that Vo = 4 0o V. 12 7 20-90 VG) -41
-
How do security mechanisms like access control lists (ACLs), role-based access control (RBAC), and attribute-based access control (ABAC) enforce least privilege principles and mitigate the risk of...
-
LaBlanc, Inc., has the opportunity to purchase new equipment that will save the company \($12,000.00\) per year in manufacturing costs. The \($62,000.00\) of equipment is expected to be useful for 8...
-
Following are financial statement information for Welmark Corporation as of Year 2 and Year 3. Required: Using the residual income model, prepare a valuation of the common stock of Welmark...
-
The stresses on two perpendicular planes through a point in a body are 30 Mpa and 15 Mpa both tensile along with shear stress of 25 Mpa. Find by using Mohr's circle 1. The magnitude and direction of...
-
The comparative balance sheets and income statement of Piura Manufacturing follow. Additional transactions for 2012 were as follows: a. Cash dividends of $8,000 were paid. b. Equipment was acquired...
-
Cypress Company has an October 31 fiscal year end and prepares adjusting entries on an annual basis. The October 31, 2021, trial balance included the following selected accounts: Accumulated...
-
The adjusted trial balance for Arun?s Animations is presented below. Instructions a. Prepare an income statement and statement of owner?s equity for the year. Mr. Arun invested $5,000 cash in the...
-
You are supplied with the following information and required to work out the production hour rate of recovery of overheads in Departments A, B and C. Expenses of Service Department P and Q are...
-
The company has net income for the year of $180,000. The balance in Retained Earnings at the beginning of the year is $130,000. The company declared dividends of $60,000 during the year. What is the...
-
In 1990 Walter Arfeuille of Belgium lifted a 281.5-kg object through a distance of 17.1 cm using only his teeth. (a) How much work did Arfeuille do on the object? J (b) What magnitude force did he...
-
Verify that (AB)T = BTAT. 1 3 4 [ ] -102 -21 A = 1 0 and B = 1 2 STEP 1: Find (AB)T. -2 (AB) = = STEP 2: Find BTAT. BTAT = =
-
Currently Nathan deposits $ 3 0 0 at the end of each month into an IRA and his company will match 5 0 % of his deposit amount. He will retire in 4 5 years. Assuming his account will earn a 7 . 5 %...
-
misks you colazib os ton vilesi mol yas What is the output of the following snippets of code? (15 points) a. int fees[] = {1, 2, 3, 4, 5, 6}; int fines[] = {10, 20, 30, 40}; int i = 4; for (i=0;i
-
Discuss what factors lead to inelastic demand and supply curves. Are they likely to be found together in the same situation?
-
Audrey purchases a riding lawnmower using a 2-year, no-interest deferred payment plan at Lawn Depot for x dollars. There was a down payment of d dollars and a monthly payment of m dollars. Express...
-
Kari Corporation issues 5,000, $4 cumulative preferred shares at $80 each and 10,000 common shares at $18 each at the beginning of 2019. Each preferred share is convertible into four common shares....
-
Beauce Incorporated had 45,000, $2.50 preferred shares issued. It did not pay a dividend to the preferred shareholders in 2020 and 2021. (a) What are the dividends in arrears, if any, at December 31,...
-
Zurich Limited is a private corporation reporting under ASPE. At December 31, 2021, its general ledger contained the following summary data: Cost of goods sold .......................... $1,225,000...
-
La corporacin es la mejor forma organizacional de negocios en trminos de levantar capital con la emisin de valores. CIERTO O FALSO
-
1) Explain what regression gives us that correlation does not and explain the relationship between the correlation coefficient and the coefficient of determination. 2) If the regression is our...
-
The following table gives the prices of bonds Bond Principal ( $ ) Time to maturity ( years ) Annual coupon ( $ ) Bond Price ( $ ) 1 0 0 0 . 5 0 9 8 1 0 0 1 5 1 0 0 1 0 0 1 . 5 6 1 0 0 1 0 0 2 7 1 0...
Study smarter with the SolutionInn App