Question
Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical
Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Quick ratio Number of days' sales in inventory Ratio of liabilities to stockholders' equity Ratio of fixed assets to long-term liabilities Inventory turnover Times interest earned Working capital Accounts receivable turnover Current ratio Number of days' sales in receivables Computations $1,866,000+ $860,000 [($1,072,000 +$1,100,000) 2] ($4,100,000 365) $2,550,000+ $4,059,000 $2,690,000+ $1,690,000 $4,100,000+ [($1,072,000 +$1,100,000) + 2] ($976,800 + $127,000) +$127,000 $3,095,000 - $860,000 $8,260,000 [($714,000 + $740,000) + 2] $3,095,000+ $860,000 [($714,000 +$740,000) 2] ($8,260,000 365) Points: 10/10 Feedback Check My Work Look for patterns in the computations and match them to ratios that are related to each other. Identify the amounts in the computations and consider how they are related to amounts in other computations. Shaded cells have feedback. X
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