Chua Company Had a Current Ratio of 2 What Impact Will the Sale of Inventory to Customers for on December

question 131

Multiple Choice

Chua Company had a current ratio of 2.5 to 1 on December 31, 2017.On that date, the company's assets were as follows: $\begin{array}{lr}\text { Cash } & \$ 100,000 \\\text { Accounts receivable, net } & 600,000 \\\text { Inventory } & 960,000 \\\text { Prepaid expenses } & 25,000 \\\text { Equipment, net } & 2,200,000 \\\text { Total assets } & \$ 3,885,000 \\\end{array}$ What impact will the sale of inventory to customers for cash have on Chua's debt-to-equity ratio?

• A)An increase in the debt-to-equity ratio
• B)A decrease in the debt-to-equity ratio
• C)No efffect on the debt-to-equity ratio
• D)There is not enough information provided to determine the answer.

Identify how gains, losses, and specific costs are reported during reorganization.

Comprehend the classification and priority of claims in the event of liquidation or reorganization.

Distinguish between different types of assets (e.g., free assets, pledged assets) in a bankruptcy context.

Recognize the procedural steps and requirements for filing bankruptcy, including involuntary bankruptcy.

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Definitions:

Standard Deviation

Standard Deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data points from their mean.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (or return) of an investment by the cost of the investment.

Training

The process of enhancing the skills, capabilities, and knowledge of employees for performing specific jobs.

ROI Calculation

A financial metric used to evaluate the efficiency and profitability of an investment, calculated as the return on investment divided by the cost of the investment.