FIN-3403 Study Guide - Midterm Guide: Dividend Yield, Market (Place), Espn Bottomline

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Questions and problems: #1-8; #9 part a; #10-16; #18, 19 and 23 parts a and b. Concepts and critical thinking questions: #1 - 6 and #10. Concepts and crititcal thinking questions: #1 - 5. Questions and problems: #1 -6; 9; 22-24 and #26. If inventory is purchased with cash, then there is no change in the current ratio. Thus, if debt is paid off with cash, the current ratio increases if it was initially greater than 1. 0. If pressed by its short-term creditors and suppliers for immediate payment, the firm might have a difficult time meeting its obligations. A current ratio of 1. 50 means the firm has 50% more current assets than it does current liabilities. This probably represents an improvement in liquidity; short-term obligations can generally be met completely with a safety factor built in. A current ratio of 15. 0, however, might be excessive. Any excess funds sitting in current assets generally earn little or no return.

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