Impact of cash payment, In this exercise, you will discuss

Impact of cash payment

Assignment Help Financial Accounting

Reference no: EM13912651

In this exercise, you will discuss the impact of cash payment against the accounts payable on the current ratio of a company. In addition, you will perform a vertical analysis against the entries listed on the financial statement.

Task 1: A company has a current ratio of two. The CFO decides to pay off a portion of its accounts payable with cash. Explain whether the current ratio will increase, decrease, or remain unchanged. Support your answer with appropriate rationale.

Task 2: Based on the attached financial information, perform a vertical analysis, list the steps performed, and provide an explanation for your analysis.

Year-2010

Year-2009

Amount in Dollars

Sales

1,00,000

79,900

Cost of goods sold

47,500

39,950

Operating expenses

750

500

Selling expenses

9,500

9,000

Administrative-expenses

12,000

Net income

30,250

8,450

Reference no: EM13912651

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