Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. in analysing the financial statements of regis ltd

In analysing the financial statements of Regis Ltd, the following ratios were calculated. 2023 2022...

50.1K

Verified Solution

Question

Accounting

image

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: 1. Evaluate the entity's liquidity using the above information. 2. A condition of obtaining a long-term loan from the Scots Bank is that the current ratio si not fall below 1.25:1. Examine the effect on this condition if Regis Ltd considers two co 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

Answer & Explanation Solved by verified expert
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!
Become a Member

Other questions asked by students