The current ratio should not be used as the only measure of liquidity, because it does not

Question:

"The current ratio should not be used as the only measure of liquidity, because it does not take into account the composition of the current assets." Explain what this statement means.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

Financial Accounting Tools for Business Decision Making

ISBN: 978-1118644942

6th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

See More Books

Question Posted: Jan 11, 2017 09:40 AM

See More Questions

Ian Stoddart was reviewing his companys 2013 year-end financial estimates, and he was not satisfied with the overall performance. He asked his management team to prepare their detailed operational...
Should Trade Restrictions Be Used to Influence Human Rights Issues? Point Yes. Some countries do not protect human rights in the same manner as the United States. At times, the United States should...
Various classification schemes are sometimes used to given an indication of the potential of a foreign market/country. Explain why these schemes should or should not be used as a basis for deciding...
STEELCO manufactures two types of steel (steel 1 and steel 2) at two locations (plant 1 and plant 2). Three resources are needed to manufacture a ton of steel: iron, coal, and blast furnace time. The...
The following partial list of accounts and account balances has been taken from the trial balance and the adjusted trial balance of the Barker Company: Required Prepare the adjusting entry that...
Follow the instructions for Prob. 22.3-6 except use the crash times given in Table 22.7 (Sec. 22.5) instead.
What are the different types of schemes associated with complex frauds?
Wishaw, Inc. produces and sells outdoor equipment. On July 1, 2014, Wishaw, Inc. issued $150,000,000 of 20-year, 12% bonds at a market (effective) interest rate of 9%, receiving cash of $191,403,720....
Given a public good with supply given by P = 2 + Q, and 4 consumers, each with demand of P = 15.5 - Q, find the optimal aggregate CS (Answer 1) and PS (Answer 2). Blank # 1 Blank # 2 A
As the in-charge senior auditor on the audit engagement for JA Tire Manufacturing for the year ended December 31, 2019, you are responsible for performing risk assessment procedures related to the...
What are current assets? Give four examples of current assets a company might have.
Dong Corporation has a debt to total assets ratio of 45%, while its competitor, Du Ltd., has a debt to total assets ratio of 55%. Based on this information, which company is more solvent? Why?
What is the value of f(g(3))? y = f(x) y = g(x) y 1 X
2) Clifton's Parks and Recreation Department is introducing a new summer day camp for children in elementary school, providing programming from 8:00 a.m. to 5:00 p.m. Monday through Friday. The...
Competition is most influential external factors on any company in the industry. In the above table, your group has been assigned to one of the automakers as your group's client. You and your group...
What is the basic accounting entry for an initial revaluation decrease of a non depreciable asset ?Explain
It's hard to miss the ads on TV for reverse mortgages. Over the last few years, almost every "senior" actor has made ads promoting these loans. Currently, Tom Selleck seems to be the most prominent....
Critically discuss the factors that must be considered by contractors when deciding to develop a proposal. (16) 2.2 Describe three (3) three key factors that the contractor should highlight in the...
Can you think of any situations in which a large standard deviation may be desirable?
C- Consider the following scenario:- A supermarket needs to develop the following software to encourage regular customers. For this, the customer needs to supply his/her residence address, telephone...
At the beginning of the current golf season, on April 1, 2018, the general ledger of In the Pines Golf Shop showed Cash $4,200; Inventory $19,500; Common Shares $12,000; and Retained Earnings...
Eagle Hardware Store Ltd. completed the following merchandising transactions in the month of May 2018. At the beginning of May, Eagle's ledger showed Cash $7,000; Accounts Receivable $1,500;...
The adjusted trial balance of Club Canada Wholesale Inc. contained the following accounts at December 31, the company's year end: Instructions (a) Prepare a single-step income statement. (b) Prepare...
Pat and Ralph each own a 50 percent interest in PR partnership. PR partnership sells Asset 1 and recognizes gain of $100,000, of which $50,000 is allocated to Pat and $50,000 is allocated to Ralph....
Explain briefly the CSC Reference Provided . Policy Details User Role Definitions: Accounts Receivable Manager: Authorized to create, manage, and view all accounts receivable transactions and...
5 B C E F G Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down...

The current ratio should not be used as the only measure of liquidity, because it does not

Question:

Step by Step Answer:

Current assets include accounts receivable and inventory These may have increasing balance...View the full answer

Financial Accounting Tools for Business Decision Making

Students also viewed these Accounting questions