[Solution]Financial Ratios

Question 1 (30%) Quick questions 1. Please define what are the two main purposes of financial ratios. Explain who are the main users of this…

Question 1 (30%)
Quick questions
1. Please define what are the two main purposes of financial ratios. Explain who are the main users of this financial information.
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2. Please explain the difference between the sources and use of cash. Give at least two examples of each.
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3. Please explain the functions of a cash budget by mentioning three of them.
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4. Discuss three types of financial ratio categories. Explain what is the information extracted from them.
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5. Why are cash equivalents included on the statement of cash flows?
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Question 2 (35%)
Cash budget preparation
 

 

 
1- Prepare a cash budget for a company for April, May and June.
 
 
 
 
 
 
 
 
 
 
Question 3

 
 
 
 
 
 
 
 
 
 
 
Question 4
Acer company balance sheet lists the following items:
Cash: $10,000
Cash equivalents: $20,000
Accounts receivable: $5,000
Inventory: $30,000
Property & equipment: $50,000
Accounts payable: $12,000
Short-term debt: $10,000
Long-term debt: $20,000
 
1- Please calculate the current ratio of the company. Offer your expert opinion the ratio and what it says about how liquidity is managed.
2- Please calculate the cash ratio. How would you explain it ?

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