Information from Greg Companys balance sheet follows: Current assets: Cash ....................$ 2,100,000 Marketable securities ............. 7,200,000 Accounts
Question:
Information from Greg Company’s balance sheet follows:
Current assets:
Cash ....................$ 2,100,000
Marketable securities ............. 7,200,000
Accounts receivable ............... 50,500,000
Inventories ................. 65,000,000
Prepaid expenses ................ 1,000,000
Total current assets ............... $125,800,000
Current liabilities:
Notes payable ..................$ 1,400,000
Accounts payable ................ 18,000,000
Accrued expenses ............... 11,000,000
Income taxes payable ............. 600,000
Payments due within one year on long-term debt .. 3,000,000
Total current liabilities .............. $ 34,000,000
Required
Answer the following multiple-choice questions:
a. What is the acid-test ratio for Greg Company?
1. 1.60
2. 1.76
3. 1.90
4. 2.20
b. What is the effect of the collection of accounts receivable on the current ratio and net working capital, respectively?
Current Ratio Net Working Capital
1. No effect No effect
2. IncreaseIncrease
3. Increase No effect
4. No effect Increase
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 2 Cash Equivalents Marketable Securities Net Receivables Current ...View the full answer
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
