Measures of Solvency and Credit Risk
Shown Below Are Selected

question 127

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.)
$$\begin{array} { | l | r | } \hline \text { Cash and cash equivalents } & \mathbf { \$ 6 2 0 } \\\hline \text { Irvestrnents in securities } & \mathbf { \$ 0 0 } \\\hline \text { Receivables } & \mathbf { \$ } , 400 \\\hline \text { Irventories } & \$ 1,100 \\\hline \text { Prepaid experise arid other current assets } & \$ 450 \\\hline \text { Plant and equiprnent } & \mathbf { \$ , 3 0 0 } \\\hline \text { Accounts payable } & \$ 1,600 \\\hline \text { Bark loarns payable within one year } & \mathbf { \$ 3 0 0 } \\\hline \text { Income taxes payable } & \mathbf { \$ 3 0 0 } \\\hline \text { Retained Earnings } & \mathbf { \$1 7 0 0 }\\\hline \end{array}$$ (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.

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Definitions:

Short-Term Memory

The capacity for holding a small amount of information in the mind in an active, readily available state for a short period.

Primary Memory

Also known as short-term memory, it refers to the ability to hold a small amount of information in a conscious, easily accessible state for a short duration.

Chunking

A process by which individual pieces of information are bound together into a meaningful whole, often used to enhance memory retention.

Semantic Memory

A kind of permanent memory specifically for retrieving words, concepts, or numerals, imperative for understanding and applying language.