84.In analysing the financial statements of Regis Ltd, the following ratios were calculated. ...
60.1K
Verified Solution
Link Copied!
Question
Accounting
84.In analysing the financial statements of Regis Ltd, the following ratios were calculated.
|
| 2023 | 2022 |
| Current ratio | 1.1:1 | 1.3:1 |
| Quick ratio | 0.5:1 | 0.7:1 |
| Receivables turnover | 30 days | 45 days |
| Inventory turnover | 3 times | 4 times |
| Payables turnover | 60 days | 45 days |
| Gross profit margin | 10% | 7% |
| Return on equity | 15% | 12% |
Required:
- Evaluate the entitys liquidity using the above information.
- A condition of obtaining a long-term loan from the Scots Bank is that the current ratio should not fall below 1.25:1. Examine the effect on this condition if Regis Ltd considers two courses of action: either to borrow cash with a long-term loan of $90,000 from the bank; or by negotiating with creditors to settle $90,000 of payables with a long-term Note Payable. Assuming the current assets and current liabilities are 660,000 and 600,000 respectively, what course of action would you recommend and why?
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.