Question
1.Suppose that a firms capital assets are $30,920, liquid assets are $8,625, and monthly expenses are $3,650. Calculate (a) basic ratio and (b) Expanded ratio.
1.Suppose that a firms capital assets are $30,920, liquid assets are $8,625, and monthly expenses are $3,650. Calculate (a) basic ratio and (b) Expanded ratio. Interpret your results. (5pts)
2.In February 2021, John had $15,000 in his checking account, owned a collection of baseball cards that was worth $2,500, and a stock account of $7,500. He owed the IRS (Internal Revenue Service) $1,000 in taxes, had a debt of $3,000 in the five different credit cards, and a car loan balance of $15,000. (a) What is Johns net worth? (b) What is the liquid asset/debt ratio? Interpret the result. (5 pts)
3.Suppose a firm has a total debt of $703,000 and its total assets are estimated at $3,520,000. Calculate solvency ratio and explain whether this firm is solvent or not. (5 pts)
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