To calculate and analyze the current and quick (acid-test) ratios of different businesses.
Potz and Pans, a small gift shop, has current assets of $45,000 (including inventory valued at $30,000) and $9,000 in current liabilities. WannaBees, a specialty clothing store, has current assets of $150,000 (including inventory valued at $125,000) and $85,000 in current liabilities. Both businesses have applied for loans.
Instructions: Go to bankrate.com. In search bar at top right, type in see all calculators for small businesses. Answer the following questions:
The assignment will be a minimum of 1 ½ – 2 pages; 12 point font; double spaced. Use business professional writing, construct effective paragraphs, use proper grammar, punctuation, and spelling. This should be a thorough analysis of current and quick ratios. TYPE QUESTIONS FOLLOWED BY ANSWERS.
Calculate the current ratio for each company. Which company is more likely to get the loan? Analyze/discuss your answer stating why you choose the company.
The acid-test (or quick) ratio subtracts the value of the firm’s inventory from its total current assets. Because inventory is often difficult to sell, this ratio is considered an even more reliable measure of a business’s ability to repay loans than the current ratio. Calculate the quick ratio for each business and decide whether you would give either the loan. Based on you analysis for both ratios, analyze/discuss which company you would give the bank loan to.
ase study will address the concept of inflation – the rise in average level of prices sustained over time that corresponds to a fall in the internal (domestic) purchasing power of money – with regards to Venezuela. The goal here is to explore several trains of enquiry in order to critically evaluate the impact inflation has had – and may potentially have – on the national income and economic growth of Venezuela. As it stands, Venezuela’s inflation rate – 282972.8% – significantly exceeds that which holds 2nd position – Zimbabwe -175.66% (WorldEconomicForum 2019). In order to better decipher the notable disparity in inflation rates between Venezuela and the rest of the world, several areas will be analysed. This macroeconomic issue will be addressed with regards to challenges surrounding it alongside any potential benefits, it’s impact on the labour market, it’s fiscal impact in terms of taxes and government spending and potential policies that could be implemented in hope of combating it. Venezuela holds the highest recorded oil reserves in the world – possessing approximately 300 billion barrels – even surpassing Saudi Arabia. Evidently, oil is one of Venezuela’s most valuable commodities accounting for 95% of Venezuela’s exports and 25% of its gross domestic product (Independent 2018). However, during a period of time in which the global price of oil dropped, foreign demand to buy Venezuelan oil dipped simultaneously. A key factor that lead to Venezuela’s current crisis, is evidently their sole dependence on a single commodity – oil. As University of Florida’s Gamarra explains, this means “you are bound to the ups and downs of the oil price,”. Without a range of high value added assets, an economy lacks diversity and is vulnerable to ‘moments of downturns in your principal commodities (CNBC 2019).’ On an individual basis, hyperinflation renders any savings worthless due to its eroding impact on money. Consequently, people may hoard goods for instance, food due to the soaring prices. Situations such as these may lead to shortages of food supply, contributing to the issue further.>GET ANSWER