Calculate the acid test ratio, Financial Management

FIXED ASSETS                          200 000                       LONG TERM LIABILITIES

CURRENT ASSETS CASH             40 000                       LOAN                                    210 000

MARKETABLE SECUR                  50 000

ACCOUNTS RECEIVABLE             35 000                       CURRENT LIABILITIES

INVENTORY                             20 000

PREPAID EXPENSES                    5 000                       WAGES PAYABLE                50 000

TOTAL CURRENT ASSETS           150 000                     ACCOUNTS PAYABLE         50 000

                                                                             NOTES PAYABLE                 40 000

TOTAL ASSETS                               350  000                      TOTAL LIABILITIES           350 000

A) Calculate the current ratio for the Antoine Hotel

B) Calculate the acid test ratio for Antoine Hotel.

C) Comment on the above ratios from a lender and shareholder perspective

D) Calculate the Asset turnover ratio and Fixed Asset turnover ratio and comment on reason for improvement in Fixed Asset Turnover ratio over Asset turnover ratio.

E) Calculate Net profit Margin

F) Calculate return on assets for Antoine Hotel using DuPont Analysis

G) The final question will test your brains a bit but remember working capital is current assets less current liabilities. Therefore describe the effects on working capital under the following scenarios:

      1) Antoine Hotel decides to issue common stock

      2) A restaurant generates revenue on account receivables

      3) Antoine Hotel gets a long term loan

Posted Date: 3/18/2013 5:58:26 AM | Location : United States

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