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    Measures of solvency and credit risk

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    Shown below are selected items appearing in a recent balance sheet of Kellogs products. (Dollar amounts are in the thousands)

    Cash and cash equivalents...$420
    Investments in marketable securities...100
    Receivables...1,200
    Inventories...900
    Prepaid expense and other current assets...250
    Plant and equipment...3,100
    Accounts payable...1,400
    Bank loans payable within one year...100
    Income taxes payable...100
    Retained earnings...1,500

    A) Compute the following:

    1)Total quick assets$___________
    2)Total current assets$_________
    3)Total current liabilities$_________
    4)Quick ratio__________to 1
    5)Current ratio ________to 1

    B) Reasearch indicates an industry average quick ratio is 1.3 to 1, and a current ratio of 2.3 to 1. Based upon this information, does Kellog products appear more or less solvent than the average company in its industry? Explain briefly.

    © BrainMass Inc. brainmass.com October 7, 2022, 7:47 am ad1c9bdddf
    https://brainmass.com/business/credit-management-credit-policy-analysis-and-risk/measures-solvency-credit-risk-18910

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    Measures of solvency and credit risk
    Shown below are selected items appearing in a recent balance sheet of Kellogs products. (Dollar amounts are in the thousands)

    Cash and cash equivalents...$420
    Investments in marketable securities...100
    Receivables...1,200
    Inventories...900
    Prepaid expense and other current assets...250
    Plant and equipment...3,100
    Accounts payable...1,400
    Bank loans payable within one year...100
    Income taxes payable...100
    Retained earnings...1,500

    A) Compute the following:

    1)Total quick assets$___________
    2)Total current assets$_________
    3)Total current liabilities$_________
    4)Quick ratio__________to 1
    5)Current ratio ________to 1

    B) Research indicates an industry average quick ratio is 1.3 to 1, and a current ratio of 2.3 to 1. Based upon this information, does Kellogg products appear more or less solvent than the average company in its industry? Explain briefly.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com October 7, 2022, 7:47 am ad1c9bdddf>
    https://brainmass.com/business/credit-management-credit-policy-analysis-and-risk/measures-solvency-credit-risk-18910

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