1. What is the difference between working capital ratio
and working capital turnover ratios?
2. What are the different types of ratios?
3. Which two profitability ratios make total of 100%?
4. Which assets are included in current assets but not in
quick assets?
5. What are cash equivalents?
6. Give 2 examples of cash equivalents?
7. How would you treat issue of bonus shares in cash flow
statement?
8. What is the treatment of proposed dividend in Cash flow
Answers
Answer:
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Explanation:
1:Working capital of a business is the difference in values of its current assets and its current liabilities. ... A positive turnover ratio means that a business is using its working capital justifiably. It also means that the business is effectively using its current assets to manage production.
2:A few basic types of ratios used in ratio analysis are profitability ratios, debt or leverage ratios, activity ratios or efficiency ratios, liquidity ratios, solvency ratios, earnings ratios, turnover ratios, and market ratios
3:Alternatively, we can say that when cost & profit are combined at operating level, we get total revenue and thus the two ratio add to 100%. Aakash EduTech Pvt.
4:The Basics of Quick Assets
Cash and cash equivalents are the most liquid current asset items included in quick assets, while marketable securities and accounts receivable are also considered to be quick assets. Quick assets exclude inventories, because it may take more time for a company to convert them into cash.
5:Cash and cash equivalents are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount".
6:Examples of cash equivalents include commercial paper, Treasury bills, and short-term government bonds with a maturity date of three months or less. Marketable securities and money market holdings are considered cash equivalents because they are liquid and not subject to material fluctuations in value.
7:Issuing bonus shares does not involve cash flow. It increases the company's share capital but not its net assets. Bonus shares are issued according to each shareholder's stake in the company. ... For example, a three-for-two bonus issue entitles each shareholder three shares for every two they hold before the issue.
8:It is an appropriation of profits, It is debited to Surplus i.e., Balance in Statement of Profit and Loss. It is paid in the same year, it is declared. It cannot be recorded in the Balance sheet, but is recorded as Contingent Liability in the Notes to Accounts.