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What is this that often prepared in order to give a full and complete picture of cash and disbursement for a

period?
a. Balance Sheet b. Income Statement c. Cash Flow Statement d. Financial
Conditions
What is this that refers to the company’s ability to generate earnings?
a. Liquidity b. Solvency c. Stability d.
Leverage
35. What is this that considered more conservative than the other ratio because its calculation factors in
fewer items?
a. current ratio b. quick ratio c. liquidity ratio d.
operating cash ratio
36. What is this that indicates the extent to which the claims of short-term creditors are covered by assets
that are expected to be converted to cash in a period corresponding to maturity of liabilities
a. current ratio b. quick ratio c. liquidity ratio d.
operating cash ratio
37. Current assets is P 2,000, current liabilities is P 3,500. Solve for current ratio
38. Cash is P2500, Marketable Securities is P3500, A/R is P1500 while Current liabilities are P5000. Solve for
quick ratio.
39. - 40 Inventory is P 150, A/P is P 450, cash and A/R total is P 800, Solve for current ratio and quick ratio.
41. If current ratio is 1.7, what is the total A/R if cash is P20,000, inventory is P7,500 and A/P is P30,000?
a. P23,500 b. P24,000 c. P24,500
d.P23,000
42. What is a good current ratio?
a. 1 b. 2 c. 0.5 d.0.75
43. It is considered to be standard for liquidity because it can easily be converted into other assets.
a. Cash b. Bonds c. Stocks d.
Inventories
44. If company A has current ratio of 1.3 while company B has a current ratio of 2.1, which is better company?
a. Company A b. Company B c. both Company d. none of the
two companies
45. Which ratio is more relevant?
a. Quick ratio b. current ratio c. Both A and B d. None of two
ratio
46 – 50. Compute for the ratios of ABC Company. Show your solutions
ABC Financial Statement
as of Dec. 31, 2019
Assets Liabilities and Stockholder’s Equity
Cash P120,000.00 Accounts Payable
P70,000.00
Marketable Securities 35,000.00 Short-term notes
55,000.00
Accounts Receivable 45,000.00 Current Liabilities
P125,000.00
Inventories 130,000.00 Long-term debt
P2,700,000.00
Current assets P330,000.00 Total liabilities
P2,825,000.00
Equipment P2,970,000.00 Common stock
P500,000.00
Buildings 1,600,000.00 Retained earnings
P1,575,000.00
Fixed assets P4,570,000.00 Stockholder’s equity
P2,075,000.00
Total Assets P4,900,000.00 Total liabilities and equity
P4,900,000.00

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