ACC501 GDB No. 1 solution Semester "Spring 2011" “Business Finance (ACC501)”

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ACC501 GDB No. 1 solution
Semester "Spring 2011"
“Business Finance (ACC501)”
This is to inform that Graded Discussion Board (GDB) Has been opened according to the following schedule

Schedule

Opening Date and Time
April 11, 2011 At 12:01 A.M. (Mid-Night)

Closing Date and Time
April 14, 2011 At 11:59 P.M. (Mid-Night)

"Discussion Question"
Suppose you are supplier of material to a manufacturing concern ABC. Company ABC wants to purchase material from you on credit basis and promises to pay within three months. Existing Current Ratio and Quick Ratios for Company ABC are as follows:

Current Ratio = Rs. 6,351 = 1.65:1
Rs. 3,850

Quick Ratio = Rs. 5,325 = 1.38:1
Rs. 3,850

Required:
You are required to answer the following:
Being a supplier, which Balance Sheet Ratios of Company ABC will be more important for you. (Only mention the names of ratios, details are not required)
Which balance sheet items of Company ABC will be affected if you’ve supplied material of Rs. 985 on account? (Details are not required)
By keeping in view the given Current Ratio, what will be new Current Ratio of ABC Company if you’ve supplied material of Rs. 985 on account? (Working is not required. Only provide resulting figure)
SOLUTION:

Question 1 answer= quick ratio
Q 2= current ratio
Q 3= 1.9055

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