# [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.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ________________________________

2. Please explain the difference between the sources and use of cash. Give at least two examples of each.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ________________________________

3. Please explain the functions of a cash budget by mentioning three of them.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ________________________________
4. Discuss three types of financial ratio categories. Explain what is the information extracted from them.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ________________________________
5. Why are cash equivalents included on the statement of cash flows?
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
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 ?

Assignment status: Solved by our experts

>>>Click here to get this paper written at the best price. 100% Custom, 0% plagiarism.<<<