Examlex

Solved

Measures of Solvency and Credit Risk
Shown Below Are Selected

question 52

Essay

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.
 Cash and cash equivalents $620 Investments in marketable securities $300 Receivables $1,400 Inventories $1,100 Prepaid expense and other current assets $450 Plant and equipment $3,300 Accounts payable $1,600 Bank loans payable within one year $300 Income taxes payable $300 Retained earnings $1,700\begin{array} { | l | r | } \hline \text { Cash and cash equivalents } & \$ 620 \\\hline \text { Investments in marketable securities } & \$ 300 \\\hline \text { Receivables } & \$ 1,400 \\\hline \text { Inventories } & \$ 1,100 \\\hline \text { Prepaid expense and other current assets } & \$ 450 \\\hline \text { Plant and equipment } & \$ 3,300 \\\hline \text { Accounts payable } & \$ 1,600 \\\hline \text { Bank loans payable within one year } & \$ 300 \\\hline \text { Income taxes payable } & \$ 300 \\\hline \text { Retained earnings } & \$ 1,700 \\\hline\end{array}


Definitions:

Windings

Coils of wire, typically copper, wound around a core or form, used in electrical machines and devices to generate magnetic fields or induce voltages.

Drive Gear

A gear that transmits power from the engine to the drivetrain in a vehicle, facilitating movement.

Armature

The rotating coil or core of a generator or motor on which the winding is placed and electrical current is induced.

Driveshaft

A mechanical component for transmitting torque and rotation, usually used in vehicles to connect other components of the drivetrain that cannot be directly connected.

Related Questions