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# FIN621 Financial Statement Analysis GDB Spring 2020 Solution & Discussion Last Date: 08-06-2020

FIN621 Financial Statement Analysis GDB Spring 2020 Solution & Discussion Last Date: 08-06-2020

Total Marks 10
Starting Date Tuesday, June 02, 2020
Closing Date Monday, June 08, 2020
Status Open
Question Title Accounting Principles
Question Description

Accounting Principles

Learning outcome: After attempting this activity, students will be able to understand the concept of “Accounting Principles”.

Background:

Identify the accounting principle(s) applicable to each of the following situations:

Views: 444

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FIN621 GDB 1 IDEA SOL Spring 2020

In analyzing the short-term liquidity of a firm, many analysts prefer to use the acid test ratio rather than the current ratio. The primary reason for this preference is that the Conversion of inventory into cash is less reliable. Many financial analysts feel that inventory takes a lot of time to turn itself into cash to pay off debt. Business in which inventory is more than 50% of current assets then analysts prefer to use acid test ratio.

2) Cash ratio is preferred over acid-test ratio in a crisis situation. Even in a crisis situation cash ratio may not be reliable because the value of marketable securities can change drastically. The cash ratio is more useful when it is compared with industry averages and competitor averages, or when looking at changes in the same company over time.

Dear All,

Plz share the solution of GDB Spring 2020 FIN621

A.A,

I Need FIN-621 GDB Solution Spring 2020. today, is last date 8, june 2020.

• A.A

• FIN-621 gdb solution need.???, today is last date 8 june,2020.

• A.A

• FIN-621 gdb solution need.???, today is last date 8 june,2020.

• A.A

• FIN-621 gdb solution need.???, today is last date 8 june,2020.

FIN621 GDB 1 IDEA SOL Spring 2020

In analyzing the short-term liquidity of a firm, many analysts prefer to use the acid test ratio rather than the current ratio. The primary reason for this preference is that the Conversion of inventory into cash is less reliable. Many financial analysts feel that inventory takes a lot of time to turn itself into cash to pay off debt. Business in which inventory is more than 50% of current assets then analysts prefer to use acid test ratio.

2) Cash ratio is preferred over acid-test ratio in a crisis situation. Even in a crisis situation cash ratio may not be reliable because the value of marketable securities can change drastically. The cash ratio is more useful when it is compared with industry averages and competitor averages, or when looking at changes in the same company over time.

solution given by Tariq sir is correct

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