Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show all your work and the answers for the inputs PPC Ltd. signed a five-year term loan in 2020 in which PPC was required

image text in transcribed

please show all your work and the answers for the inputs

PPC Ltd. signed a five-year term loan in 2020 in which PPC was required to maintain a current ratio of 2.5 times for a loan covenant. PPC provides normal credit terms of net 30 on all its sales. The following amounts were reported in the company's year-end financial statements for 2020 and 2019: Cash Accounts receivable Short-term investments Inventory Prepaid rent Accounts payable Wages payable Income tax payable Sales tax payable Notes payable (within 1 yr.) Bank loan payable Sales revenue 2020 $ 188,100 178,700 10,000 425,500 75,100 178,900 33,400 50,300 14,800 11,900 59.700 1,883,900 2019 $280.900 90,500 1,800 402,200 75,100 193,700 54,500 59,500 14,800 23,800 0 1,662,300 Additional information: The bank loan payable is repayable in annual principal payments of $11.940. Calculate the current ratio for 2019 and 2020. (Round answers to 2 decimal places, eg. 15.25.) 2020 2019 Current ratio e Textbook and Media Calculate the quick ratio for 2019 and 2020. (Round answers to 2 decimal places, eg. 15.25.) 2020 2019 Quick ratio e Textbook and Media Calculate the accounts receivable turnover ratio for 2019 and 2020 (just use the current year's Accounts Receivable balance). (Round answers to 1 decimal place, eg. 15.2.) 2020 2019 Accounts receivable turnover ratio times times e Textbook and Media Is PPC compliant with the current ratio covenant? e Textbook and Media How does PPC's average collection period compare to its normal credit terms? (Round answers to 1 decimal place, eg. 15.2. Use 365 days for calculation.) 2020 2019 Average collection period days days The average collection period is PPC's normal credit terms

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Effective Writing A For Accountants

Authors: Claire B. May, Gordon S. May

9th Edition

0132567245, 9780132567244

More Books

Students also viewed these Accounting questions