Determine the current ratio, Cost Accounting

Assignment Help:

When firms enter into loan agreements with their bank it is very common for the agreement to have a restriction on the minimum current ratio the firm has to maintain. So, it is important that the firm be aware of the effects of their decisions on the current ratio. Consider the situation of Advanced Auto parts (AAP) in 2009. The firm had total current assets of $1,807,626,000 and current liabilities of $1,364,994,000.

a. What is the firm's current ratio?

b. If the firm were to expand its investment in inventory and finance the expansion by increasing accounts payable, how much could they increase their inventory without reducing the current ratio below 1.2?

c. If the company needed to raise its current ratio to 1.5 by reducing its investment in current assets and simultaneously reducing accounts payable and short-term debt, how much would it have to reduce current assets to accomplish this goal?


Related Discussions:- Determine the current ratio

Types of standard costs, Types of Standard Costs The standard cost set...

Types of Standard Costs The standard cost set could be ideal, basic, attainable or current. i. Basic Standards: These are long term standards that would keep unchanged ov

cost classification, Explain the value attached to this common exercise un...

Explain the value attached to this common exercise undertaken by Accountants.

CORPORATE ACCOUNTING, I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE O...

I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE OR LINK TO SHARE ASSIGNMENT DETAIL

Which of the four types of costs would include ceo''s salary, Which of the ...

Which of the four types of costs would include a CEO's salary? A. Unit-Level B. Batch-Level C. Product Sustaining D. Facility Sustaining

Considerations in variance investigation, Considerations in Variance Invest...

Considerations in Variance Investigation As already notice above, not all variances are investigated; this is only the material and meaningful as for cost control reasons vari

The manufacturing overhead cost, Rediger Inc. a manufacturing company, has ...

Rediger Inc. a manufacturing company, has provided the following data for the month of June. The balance in the Work in Process inventory account was $22,000 at the beginning of th

Depreciable cost, A organization is evaluating a proposed 4-year project.  ...

A organization is evaluating a proposed 4-year project.  The depreciable cost will have the following: $300,000 for the equipment, $20,000 for shipping, and $30,000 for installatio

Goal definition and communication - standard costing, Goal Definition and C...

Goal Definition and Communication - Behavioural Aspects of Standards Goal Definition The desired goals should be clearly defined to individuals, departments and the organ

Create the consolidated statement of comprehensive income, Question ...

Question The statements of comprehensive income for three entities for the year ended 30 September 2009 are presented below: SOT PB UV

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd