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You are part of a group of individuals (incorporators) who want to form a new corporation. During discussions on forming the business, Mark Adams makes this statement:
Our business will have accounts receivable and accounts payable. It will also acquire a substantial amount of computers and equipment. Will it be acceptable to use the cash basis of accounting?
Prepare a response for Mark and the other incorporators.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.
Dividend Yield
A metric indicating the annual dividends a firm distributes in relation to its share price.
Asset Turnover
A financial ratio indicating how efficiently a company uses its assets to generate revenue.
Inventory Turnover
is a ratio showing how many times a company's inventory is sold and replaced over a specific period, highlighting the efficiency of inventory management.
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