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Ratios Question and answers 100% correct 2024/2025
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Ratios Question and answers 100% correct 2024/2025 Ratios- APSC 221 what does current mean - correct answer stuff that can be flipped easily for cash ( not cars, land, buildings) what do assets include that quick assets don't - correct answer inventories current ratio - correct answe...

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  • October 6, 2024
  • 3
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • ratios
  • ratios question and answers 100 correct

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  • APSC 221
  • APSC 221

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Carzola98

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Ratios- APSC 221
what does current mean - correct answer ✔stuff that can be flipped easily for
cash ( not cars, land, buildings)


what do assets include that quick assets don't - correct answer ✔inventories


current ratio - correct answer ✔current assets/ current liabilities
- should be around 2 for normal businesses
- lower than 2 but above one is normal for new ventures
- not good lower than this because current liabilites are likely not to be met
- if always above industry norm, the company likely has too much inventory in
stock that could have remained as cash to be invested and suggests that the
company is uncertain about sale projections
- just because you have a lot of assets, this could include inventories which is
hard to liquidate
- high ratio could also mean that they are not selling
- Should be high for panda parking if they have a lot of people willing to give
up parking spots because they have access to several different parking spots
and therefore this is their 'inventory / assets'


acid test ratio - correct answer ✔quick assets / current liabilites
- the ease of paying off liabilities without liquidation
- ratio less than 1 means the company has troubles paying short-term
liabilities
- bad if it is too high because they should be investing this money instead
- should be around 1

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