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Measures of solvency and credit risk
Shown below are selected items appearing in a recent balance sheet of Grant Products. (Dollar amounts are in thousands.)
(a) Compute the following:
(1) Total quick assets $____________
(2) Total current assets $____________
(3) Total current liabilities $____________
(4) Quick ratio ______ to 1
(5) Current ratio ______ to 1
(b) Research indicates an industry average quick ratio is 1.3 to 1, and a current ratio of 2.3 to 1. Based upon this information, does Grant Products appear more or less solvent than the average company in its industry? Explain briefly.
Net Working Capital
The distinction between the immediate resources and obligations of a company, highlighting its financial condition for the short run.
Short-term Obligations
Debts or liabilities that are due to be paid within a short period of time, typically within a year.
Operating Cash Flow
The cash generated from a company's normal business operations, indicating whether a company is able to maintain or grow its operations.
CCA Half-year Rule
A regulation in Canadian tax law allowing only half of the normal capital cost allowance deduction in the year of acquisition of a depreciable asset.
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