R. Kudemus Co. and R. Ballgala Co. were competitors and both engaged in buying and selling of almost the same products. Their Balance Sheet after a year of operation were hereunder presented: Current Assets: Cash In Bank Accounts Receivable Merchandise Inventory Prepaid Expenses Current Liabilities: Accounts Payable Accrued Expense Notes Payable (Current) Both were bank loan applicants. Required: R. Kudemus Co. P105,000 80,000 120,000 15,000 35,000 15,000 R. Baligala Co. P100,000 60,000 70,000 4,000 30,000 10,000 1) Determine the working capital of each company. 2) Which of the two (2) companies has a better position of paying their financial obligations when it matures? Compute and interpret their respective "banker's ratio". 3) Which of the two (2) companies was more liquid in terms of paying debts right away. Compute and interpret their respective "acid-test ratio".
R. Kudemus Co. and R. Ballgala Co. were competitors and both engaged in buying and selling of almost the same products. Their Balance Sheet after a year of operation were hereunder presented: Current Assets: Cash In Bank Accounts Receivable Merchandise Inventory Prepaid Expenses Current Liabilities: Accounts Payable Accrued Expense Notes Payable (Current) Both were bank loan applicants. Required: R. Kudemus Co. P105,000 80,000 120,000 15,000 35,000 15,000 R. Baligala Co. P100,000 60,000 70,000 4,000 30,000 10,000 1) Determine the working capital of each company. 2) Which of the two (2) companies has a better position of paying their financial obligations when it matures? Compute and interpret their respective "banker's ratio". 3) Which of the two (2) companies was more liquid in terms of paying debts right away. Compute and interpret their respective "acid-test ratio".
Chapter4: The Adjustment Process
Section: Chapter Questions
Problem 2PB: To demonstrate the difference between cash account activity and accrual basis profits (net income),...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning