Based on the amounts of inventory and the income tax rate, the LIFO liquidation profit would be $18750.
The LIFO liquidation profit:
Lifo assigns an amount to the cost of goods sold on the income statement that approximates its current cost; it also better matches current costs with revenues in computing gross profit.
First, find the COGS:
= (118,000 x 29) + (4,000 x 25)
= $3,522,000
The LIFO liquidation profit is:
= (Sales - COGS) x ( 1 - Tax rate)
= ((121,000 x 29) - 3,522,000) x (1 - 25%)
= $18,750
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what was the percentage return on a non-dividend-paying stock that was purchased for $40.00 and then sold after one year for $39.00?
Percentage return on a non-dividend-paying stock that was purchased for $40.00 and then sold after one year for $39.00 is -2.50%
% return on a stock= -2.50%
% return= Sale price -Purchase Price/Purchase Price
= $39-$40/$40
= -2.50%
The ownership certificates of any corporation are referred to as "stocks" in general. On the other hand, a share alludes to the stock certificate of a specific business. A shareholder is someone who owns stock in a specific corporation. Stocks come in two varieties: common and favored.
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Mr. D is the manager of a local walgreens. His biggest concern is to make sure that his store is always making the most profit possible. He cuts costs by focusing on certain logistical decisions. Every other day walgreens receives shipments from pepsi, evian, hershey, and numerous other manufacturers. Walgreens insists on small shipments every two days, which helps to keep their inventory costs low. What system is mr. D using at walgreens to reduce his costs?.
Mr.D is using just-in-time inventory at Walgreens to reduce his costs.
Just-in-time, or JIT, is an inventory management method in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover.
A just-in-time (JIT) inventory system is a management strategy that has a company receive goods as close as possible to when they are actually needed. So, if a car assembly plant needs to install airbags, it does not keep a stock of airbags on its shelves but receives them as those cars come onto the assembly line.
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if the company uses the lifo pepetual invontory system what would be the cost of the ending inventory
If the company uses the LIFO perpetual inventory system then the cost of the ending inventory is net income should be understood when cost of goods sold is overestimated.
Ending inventory is the worth of goods that are still available for purchase at the end of an accounting period. It consists of the initial stock plus net purchases less cost of goods sold. Inventory purchases that are considered "net purchases" have had any returns or discounts subtracted. Even when the total number of inventory units at the end of each accounting period is the same, the inventory valuation method used has an effect on the final inventory value. When there are rising prices or inflationary pressures, the FIFO (first in, first out) technique is chosen since it produces a higher ending inventory valuation than LIFO (last in, first out). In light of various business situations, some companies purposefully use LIFO or FIFO strategies. Performing a physical count at the end of each month and then valuing the inventory using a method like LIFO, FIFO, or Weighted Average Method are the two most straightforward ways to determine closing inventory. The majority of the time, it is not feasible to do a physical count. As a result, ending inventory is estimated using an estimation method.
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describe situations in which you have an integration of future lump sums and streams of equal and unequal payments
An annuity may consist of a number of similar cash flows that are charged and settled on a regular basis. The recurring occurrence of a specified amount of CF over a specified length of time is one of the fundamental components of an annuity.
What is the concept of the excerpt?There will always be instances where a client settles their account or receives receipts for more than the whole amount owed. An annuity is not necessary in this situation.
The lump sum amount, which is the total of all unequal amounts paid or received up until that moment, will serve as the basis for determining the value at maturity.
Thus, An annuity may consist of a number of similar cash flows that are charged and settled on a regular basis.
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an analyst determines that a company has a return on equity of 16% and pays 40% of its earnings in dividends. if the firm recently paid a $1.50 dividend and the stock is selling for $40, what is the required rate of return on the stock if it is priced according to the dividend discount model?
The required rate of return on the stock if it is priced according to the dividend discount model is 13.7%.
g = (1 − payout)(Return of Exchange)
= (1 − 0.40)(16%)
= 9.6%
k= [tex]\frac{(1.5)(1.096)}{40} + .096[/tex]
= 13.7%
By assuming that the stock is worth the sum of all of the company's future dividend payments, discounted back to its present value, the dividend discount model is a method used in finance and investment to value the price of a company's stock. The dividend discount model (DDM), a mathematical technique for predicting the price of a company's stock, is based on the notion that all of the company's future dividend payments are worth the current value of the shares when discounted back to their present value. One way for figuring out a stock's intrinsic value is DDM.
Note that the full question is:
An analyst determines that a company has a return on equity of 16% and pays 40% of its earnings in dividends. If the firm recently paid a $1.50 dividend and the stock is selling for $40, what is the required rate of return on the stock if it is priced according to the dividend discount model?
A) 9.6%.
B) 10.2%.
C) 13.7%.
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interperiod equity and accountability are two basic ingredients of the governmental accounting system; however, to be more accountable budgets requires close to cash accounting while accrual basis accounting lends more to the interperiod equity concept but calls for the modified accrual basis. this is referred to as the government accounting dilemma. this is a false statement! this is a true statement!
Interpterion fairness and duty are simple elements of the governmental accounting system; True.
The required details for Accountability in given paragraph
"Interpterion Equity" and "Accountability" are simple elements of the governmental accounting system. Where, "Interpterion Equity" emphasizes the duty of Government to reveal whether or not the Revenue in Current 12 months is enough to pay for the blessings offering within side the Current 12 months, or whether or not destiny taxpayers will required to hold the burdens for offerings formerly provided and "Accountability" locations a more responsibility on Government concerning the Budgeted sales and allotted expenditures. Budgeting in Private zone isn't always mandatory, and they may use it as a device for economic planning, however in Government organizations Budgeting is used for Financial Discipline, and the tasks which had been undertaken need to be fulfilled with within side the barriers of the budgeted expenditure.
If it deviates, right clarification is to be made, due to the presence of the function called "Accountability".
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Which ncaa women’s basketball official team account tops the social media interactions rankings as of september 2022?.
The 40th iteration of the competition started on March 16, 2022, and came to an end with the championship game on April 3, 2022, at Target Center in Minneapolis, when the South Carolina Gamecocks defeated the UConn Huskies 64-49 to claim their second NCAA championship.
The National Collegiate Athletic Association NCAA, a member-driven organization, is committed to the welfare and success of college athletes for the rest of their lives.
An official basketball league in the US is called the Women's National Basketball Association (WNBA). There are twelve teams in it. The National Basketball Association (women) equivalent was established on April 22, 1996, and league play began in 1997.
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according to the text, the most important of the five factors which give rise to monopoly is multiple choice exclusive control over important inputs. economies of scale. patents. government licenses.
The most important of the five factors which give rise to monopoly is economies of scale.
Only one company is active in the market. entry barriers are high. These barriers are so high that they do not prevent other companies from entering the market. Third, there is no substitute for the goods that monopolies produce. Competitive intimidation such as predatory pricing.
A monopoly is defined as a single seller or manufacturer that excludes competition from offering the same product. Monopolies can influence price changes and create barriers to market entry for competitors. These disorders include Economies of scale leading to natural monopolies. Control of physical resources. Legal Restrictions on Competition Patent Trademark and Copyright Protection.
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Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?.
Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. $11 is the total profit if she operates at her profit-maximizing price.
Total revenue = Price x Quantity
Total cost = Total fixed cost + Variable cost per unit x Quantity
Marginal revenue =Current total revenue - Previous total revenue/Current quantity -Previous quantity
Marginal cost =Current total cost - Previous total cost/Current quantity Previous quantity
Maximum profit =Total revenue Total costMazimum profit = 24 - 13 =11The total profit if he operates at her profit-maximizing price is c. $11.As Irving Fisher explained, a monopoly is a noncompetitive demand that creates a situation in which a particular person or firm is the sole supplier of a particular thing. A monopoly os an individual, group, or company that controls and controls the demand for a particular good or service. This lack of competition and lack of alternative goods and services means that monopolists wield enough power in their businesses to charge high prices.
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if the nominal exchange rate between british pounds and dollars is 0.5 pound per dollar, how many dollars can you get for a british pound?
We get 2 dollars, if the nominal exchange rate between British pounds and dollars is 0.5 pound per dollar
What is exchange rate?Foreign investment carries an inherent risk known as exchange rate risk, often known as forex risk, although it can be significantly reduced by using hedging strategies. An investor would need to completely refrain from investing in foreign assets in order to minimize FX risk. However, using currency forwards or futures, exchange rate risk can be reduced.Changes in the investor's home currency relative to the foreign investment currency are what lead to exchange rate risk.These risks can be reduced by employing a hedged exchange-traded fund or by using different investment instruments, such as currency forwards, futures, or options, by the individual investor.While exchange rate risk cannot entirely be eliminated, it can be reduced.To learn more about exchange rate, refer to
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Customers arrive at a movie theater at the advertised movie time only to find that they have to sit through several previews and prepreview ads before the movie starts. Many complain that the time devoted to previews is too long. A preliminary sample conducted by the wall street journal showed that the standard deviation of the amount of time devoted to previews was 4 minutes. Use that as a planning value for the standard deviation in answering the following questions. Round your answer to next whole number. A. If we want to estimate the population mean time for previews at movie theaters with a margin of error of seconds, what sample size should be used? assume confidence. B. If we want to estimate the population mean time for previews at movie theaters with a margin of error of minute, what sample size should be used? assume confidence.
a) The required Sample Size is 40.
b) the required Sample Size is 62.
Step-by-step explanation:
Given the data in the question;
standard deviation σ = 4 minutes
a)
margin of error E = 75 seconds = ( 75 / 60 )minutes = 1.25 minutes
And 95% confidence.
Now, the Critical Value of z for 0.95 confidence interval;
∝ = 1 - 0.95 = 0.05
= 1.96
so, sample size n will be;
n = [ × σ/E ]²
we substitute;
n = [ 1.96 × (4/1.25) ]²
n = [ 1.96 × 3.2 ]²
n = [ 6.272 ]²
n = 39.338
Since we referring to a number of samples, it approximately becomes 40
Therefore, the required Sample Size is 40
b)
margin of error E = 1 minutes
And 95% confidence.
Now, the Critical Value of z for 0.95 confidence interval;
∝ = 1 - 0.95 = 0.05
= 1.96
so, sample size n will be;
n = [ × σ/E ]²
we substitute;
n = [ 1.96 × (4/1) ]²
n = [ 1.96 × 4 ]²
n = [ 7.84 ]²
n = 61.466
Since we referring to a number of samples, its approximately becomes 62.
Therefore, the required Sample Size is 62.
Sample size determination involves choosing the number of observations or repetitions to include in a statistical sample.
The sample size is an important feature of any experimental study where the goal is to draw conclusions about a population from a sample.
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gabriella has been an editorial assistant at a textbook publisher for three years. when an associate editor position opens up on her team, she applies for the position and gets it. what is one issue the company may have as a result of promoting gabriella into this new position?
The one issue the company may have as a result of promoting Gabriella to this new position is The company will have to fill Gabriella's vacant editorial assistant position.
A few examples of commonly used sales advertising encompass giving out coupons or vouchers, quickly decreasing costs through discounts, sampling, offering giveaways, flash sales or buy-one-get-one-loose offers, and plenty extra.
Advertising and promoting and merchandising are crucial components of a successful business. Their outcomes consist of emblem establishment, boom within your goal market phase, the invention of recent secondary markets, the improvement of patron loyalty, and protection towards competition.
Advertising, public relations, and direct selling are three demonstrated methods of powerful advertising, even though social media advertising has emerged as an effective tool for driving sales at less price than traditional techniques.
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Angelo works as the frozen food manager in a large grocery store. When his stock of two-pound bags of frozen shrimp gets down to two cases, he emails the warehouse to send ten cases to restock. The type of decision angelo is making about restocking shrimp is a?.
The type of decision Angelo is making about restocking shrimp is a programmed decision.
Programmed decisions are those which might be repeated over the years and for which a present set of rules may be evolved to manually the procedure.
A brief description of different sorts of programmed and non-programmed decisions is given beneath:
Organizational and private selections: those selections reflect the use of authority.
Operational and strategic choices:
research and disaster—intuitive selections.opportunity and hassle-fixing decisions.Programmed decisions are decisions that have been made so normally within the past that managers have advanced guidelines or recommendations to be implemented whilst positive conditions unavoidably occur.An instance of a programmed choice is whilst a workplace manager orders extra materials while the inventory drops to a certain degree.
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a person is convinced that a lending institution is charging too much interest for a loan. this person should be aware that
A person is convinced that a lending institution is charging too much interest for a loan. This person should be aware that there are: State Usury Laws.
Any form of financial institution that offers loans to borrowers is a lending institution. Lenders come in a wide variety of forms today, from banks and credit unions to mortgage and payday lending businesses.
Depending on how the business is structured, different financial institutions will offer a different range of loan options. All lenders typically impose a rate of interest on the amount borrowed and demand that the borrower sign a contract outlining the conditions of repayment. A bank is one of the more typical types of lending institutions. Although banks offer a variety of services, one that customers frequently consider contacting is the one that offers loans.
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the money paid by private business to the suppliers of loans used to purchase capital or money that households receive on savings accounts is called .
The money paid by private businesses to the suppliers of loans used to purchase capital or money that households receive in a savings accounts is called interest.
Consists of Federal excise taxes and customs duties, kingdom and local sales taxes, belongings taxes (together with residential actual estate taxes), motor car licenses, severance taxes, and unique exams.
Government purchases encompass any spending by way of federal, country, and nearby companies, with the exception of debt and transfer bills consisting of Social protection. Average, government purchases are a key element of a nation's gross domestic product (GDP).
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the store is selling cough drops for $1.49. you know that the net profit is $0.31 and the overhead is $0.20. what is the cost?
The cost price is $0.98 after removing the overhead and profit from selling price.
the store is selling = $1.49
net profit = $0.31
overhead = $0.20
Cost price = 1.49 - 0.31 - 0.20 = 0.98
Overhead costs, frequently called overhead or running costs, confer with the ones charges related to running a business that can not be connected to growing or generating a products or services. they're the fees the commercial enterprise incurs to stay in commercial enterprise, regardless of its fulfillment level.
In commercial enterprise, overhead or overhead price refers to an ongoing cost of running a commercial enterprise. Overheads are the expenditure which cannot be comfortably traced to or diagnosed with any unique sales unit, not like operating costs which include uncooked material and labor.
Overhead refers to the continued commercial enterprise fees not at once attributed to growing a service or product. it's miles essential for budgeting purposes but also for figuring out how a whole lot a employer need to charge for its services or products to make a earnings.
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Specific promotional tools used in __________ include stories, sponsorships, events, and web pages.
Specific promotional tools used in public relations include stories, sponsorships, events, and web pages.
Which of the following is the most used public relations tool?Press releases, news conferences, and publicity are some of the most widely utilized PR tools.Positive PR is also generated by sponsorships, product placements, and social media. PR Tools are : HubSpot's Public Relations Kit, Prowly ,Muck Rack.Meltwater ,Prezly, Mention, Coverage Book, CisPR ToolsPublic relations is an important component of the promotional mix.Unlike paid marketing initiatives such as advertising your company, public relations focuses on earned media and might include unpaid communication methods.Public relations is all about managing perceptions – how people see your company. Public relations is an important component of the promotional mix.Unlike paid marketing initiatives such as advertising your company, public relations focuses on earned media and might include unpaid communication methods.Public relations is all about managing perceptions – how people see your company.To learn more about public relations tool refer
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on july 9, mifflin company receives an $8,800, 90-day, 8% note from customer payton summers to replace an account receivable. what entry should be made by mifflin on july 9 to record receipt of the note?
The journal entry for Mifflin company on July 9 will be:
Cash A/c......Dr. $8800
Interest revenue A/c.......Cr. $176
Notes receivable A/c......Cr. $8624
A promissory note is a type of debt instrument in which one party—the note's issuer or maker—promises in writing to pay another party—the note's payee—a specific amount of money, either immediately or at a predetermined later date.
Value of the note = $8800
Interest on the note = 8%
Number of days = 90
Interest revenue from the note = Value of the note*90/360*Interest on the note
8800*90/360*8% = $176
Journal entry:
Cash A/c......Dr. $8800
Interest revenue A/c.......Cr. $176
Notes receivable A/c......Cr. $8624
(Being note received)
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a company sells merchandise to a customer on credit. the journal entry that the company makes to record this sale would include a
A company sells merchandise to a customer on credit. The journal entry that the company makes to record this sale would include a credit to a sale account.
The credit journal entry refers to journal entry which is recorded by the company in its sales journal when the firm makes any sale of the inventory to a third party on credit. Then, the debtor’s account or account receivable account is debited with corresponding credit to the sales account.
A credit entry is used to decrease the value of an asset or increase the value of a liability.
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Answer:Credit
Explanation: got correct on my hw
a stock pays a constant annual dividend and sells for $31.11 per share. if the dividend yield of this stock is 9 percent, what is the dividend amount?
The profit measure of the stock is $ 2.80.
Yield on Dividends: It refers to the dividend income from a specific stock's dividends that yields a return.
Dividend
A company's profits are divided between dividends and retained earnings in accounting.A dividend is a payment made to shareholders as a return on their investment from a company's earnings.A significant factor in determining a stock's value is the dividend growth rate, which can be constant, zero, or multiple.The assumption that the current stock price represents the present value of all future dividends is one method for valuing stocks.The dividend yield is the ratio of the stock's price to the dividend paid.The dividend yield formula can be used to calculate the dividend amount:
Dividend Yield is calculated by dividing the total dividend by the stock's current price, where 0.09 equals the total dividend divided by 31.11 equals 2.80.
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statistical sampling generally may be applied to test internal control when the client's internal control procedures:
Internal control can be tested using statistical sampling when the client's internal control procedures: Create an audit trail by storing proof of compliance.
The sample should be chosen by the internal auditor in a way that ensures it is representative of the overall population. For this to be possible, every item or sampling unit in the population must be given the chance to be chosen.
sampling for a statistical audit. With statistical audit sampling, the auditor chooses the items to be verified using statistical techniques like random sampling. When there are numerous items or transactions on file, random sampling is used. Business documents are examined for any indications of review as part of control tests. Internal controls have been used if there are signatures, checkmarks, and stamps.
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cory has a low paying part-time job in the retail industry after being laid off from his position as a bank branch manager. he is considered
Cory has a low paying part-time job in the retail industry after being laid off from his position as a bank branch manager. He is considered. underemployed.
What is an underemployed person?when members of the labor force are working part-time, irregular hours, or employment that are insufficient for their needs in terms of training or income.The state of not having enough workIf you are underemployed, you are working less than you are capable of, which may involve working less hours or in a position that doesn't fully utilize your qualifications and experience.You may be underemployed if you work fewer hours or make significantly less money than you anticipated, among other indicators.
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on a balanced growth path with population growth and technological progress, select an answer and submit. for keyboard navigation, use the up/down arrow keys to select an answer. a capital's share of income increases. b labor's share of income increases. c factor income shares are constant.
On a balanced growth path with population growth and technological progress abor's share of income increases.
The correct option is B.
What is income shares formula?To make this calculation easier to understand, courts will typically calculate the monthly cost of raising a kid, sum the total incomes of both parents, and then decide how much each parent would be responsible for based on their contribution to the total cost.
What is an income share loan?Income-share contracts are agreements in which a school, business, or lender agrees to provide funding in return for a portion of the students' future earnings. Although not entirely, this new mortgage product's main target market is people who need funds to pay for their education.
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how much will the van company have to set aside each period to have $60,000 twelve years from now? assume money is at 12% compounded semiannually. (round your answer to the nearest cent.)
Compound interest at the end of 12 years from now will $813,000 be if compounded at 12% semiannually.
What is compound interest?Compound interest is the type of interest that is provided add the cumulative amount present in the account of the individual therefore the interest earned in the later years is greater then that was earned in the previous years.
In the case scenario provided in the question the amount is $60,000 and will be compounded at 12% semiannually that is every six months.
The calculation is Seen as below,
The formula to calculate compound interest is
P (1+i) ^ (1-n)
Where P is the principal amount
i is the interest rate
and n is the number of interest being accrued
$60,000 (1 + 0.12) ^ (1 - 24)
$813,000.
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what refers to all the activities related to planning, implementing, and monitoring the wages, salaries, and benefits of employees?
Continuing Compensation Provisions - Consolidated Comprehensive Budget Adjustment Act - provides that workers and their families are entitled to the collective health and Helps maintain insurance coverage.
Three benefits are mandated by state or federal governments: State Workers' Compensation Insurance, State Unemployment Insurance, and State Social Security. Internal equity means that wage rates should be equal for jobs with similar jobs and different for jobs with different jobs. The compensation professional uses two of her tools to make these decisions: Job analysis and job evaluation. Social Security and Medicare. unemployment insurance. Workers Compensation Insurance. Family and Medical Leave Act protection.
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how does the hr function meet the needs of customers under the customer-oriented perspective of human resource management? (select all that apply)
The HR functions to meet the needs of the customer under the customer-oriented perspective of human resource management are:
By use of performance management.With qualified personnel.Through development and training.What do we mean by the customer-oriented perspective?A business strategy known as "customer orientation" prioritizes the demands of the client over those of the company. Companies that prioritize their customers are aware that without consistently increasing their customer focus, their firm will not succeed. It's a way of thinking that connects the objectives of your company and those of your clients.You can consider long-term profits by using a customer-centric approach. Additionally, it will assist you in avoiding making decisions about your customers' needs without taking into account what they have to say.Under the customer-oriented viewpoint of human resource management, the HR functions to address customer needs are:
By use of performance management.With qualified personnel.Through development and training.Therefore, the HR functions to meet the needs of the customer under the customer-oriented perspective of human resource management are:
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Guero brought his proposal to poté before the meeting saying, "i’m sure you have some ideas on this, and we could try to get them incorporated upfront. " which influence tactic is guero using?.
As Guero brought his proposal to poté before the meeting by saying "i’m sure you have some ideas on this, and we could try to get them incorporated upfront", the influence tactic that Guero is using is known as consultation.
What is an influence tactic?In an organization, an influence tactics refers to those strategies that leaders can use to change their employees’ attitudes, values, or behaviors. An actual tactics that the leaders use vary according to the situation and the desired outcomes. For example, the middle management leaders use different tactics to influence their superiors and subordinates.
A Consultation, as an influence tactic, is the most democratic and collaborative of tactics and requires involving people in strategic planning and decision-making. It is is also a highly effective pull tactic.
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a firm has invested $500 in a new machine that is expected to last for the next 8 years. the machine will be depreciated on a straight line basis down to zero by the end of its 8 year life. the firm projects that the machine will generate consecutive annual cash inflows of $500 beginning in one year and will generate consecutive annual cash outflows at 280 also beginning in one year.. assuming the tax rate of 36%, determine the firm's cash flow next year
If the tax rate is given to be 36 percent, the cash flow of the firm is calculated to be $163.3 for the next year
How to solve for the cash flowThe first step that we would have to carry out would be to solve for the depreciation
The formula is give as investment / period
= 500 / 8
= 62.5 every year
Next we have to solve for Ebit. That is Earning before interest and tax. The formula is given as
EBIT = cash inflow - (cash outflows + depreciation)
EBIT = 500 - (280 + 62.5)
EBIT = 500 - 342.5
EBIT = 157.5
Next we have to deduct the earning after Tax
EAT = 157.5 * (1 - 0.36)
= 100.8
We have to finish the calculation by adding the depreciation. This is due to the fact that the depreciation is a non cash expense.
Hence the firms cash flow for the next year would be 100.8 + 62.5
= $163.3
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economists who are in favor of smaller government tend to prefer when expansionary policy is needed to raise aggregate demand
Economists who are in favor of smaller government tend to prefer tax cuts, when expansionary fiscal policy is needed to raise aggregate demand.
Tax reductions and higher government spending are the two primary manifestations of an expansionary fiscal policy. Both of these measures aim to boost overall demand while adding to deficits or reducing budget surpluses. They are typically used in recessions to accelerate recovery or in times of recessionary panic to prevent it.
Fiscal policy is viewed by classical macroeconomics as an effective tactic the government can employ to balance out the natural decline in spending and economic activity that occurs during a recession. Consumers and corporations reduce spending and investments as business conditions deteriorate. This budgetary restriction worsens the state of the company's operations and starts a vicious cycle that can be challenging to break.
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quick will give brainliest Bank A has a liquidity ratio close to 30 percent. This ratio will most likely _____.
not affect the bank’s run-off rate
cause a higher than acceptable run-off rate
cause a lower than acceptable run-off rate
Quick will provide the smartest The liquidity ratio for Bank A is almost 30%. The bank's run-off will probably not be impacted by this ratio.
Quick ratio is a ratio of liquidity?In order to determine a company's ability to meet its immediate financial obligations, analysts and investors use liquidity data called the quick and current ratios.The current ratio is calculated by dividing current liabilities by current assets.The quick ratio only considers highly liquid assets or cash equivalents as current assets.
What is a decent quick ratio?If the company's assets can be turned into cash extremely fast, a ratio of less than 1.5 is less problematic. Although a current ratio of three or four may indicate financial health, it also raises questions about whether a corporation is ineffective at investing the money it does have.
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