Finance Questions

Archive for September, 2010

Question: I have an accounting question as I'm confused?

Do correct me if I'm wrong here but the Current Ratio is Current Assets / Current Liabilities. Now the Current Assets of this company, year ending 2008, is 41076. The current liabilities equal (503). Now I've learned the Current Ratio should not be less than 1 and ideally around 2. However, I must be doing something wrong because surely the Current Ratio cannot be as high as 81?!? Unless I'm reading the accounts wrong. Here's a link to the accounts and to save time, its page 21 on the pdf:

Answer: The Current Ratio formula is correct :
Current Ratio= Current Assets/Current Liabilities

Your reading to the current assets is wrong because it should be 62305 and NOT 41076. The 'Total Assets' includes 'Current Assets' ONLY, and it does not include Fixed Assets, so we take 62305.
And to take the Current Liabilities you take 61802 and NOT 41076 this is also because it includes Current Liabilities and not Long-Term Liabilities. Therefore we take 62305.
So...

Current Ratio (should be between 1.5 and 2 ) = 62305/61802= 1.008
This means that the company is having some problems.

~Vogue

Paul Bullinger - First Finance

Question: Would the financial crisis have been avoided if Alvin Greene had chaired the Senate Finance Committee?

SC voters remember to vote for Alvin Greene Democrat for US Senate!!!!!!!!!!!!

Answer: Hell to the YES.

On 13 October 2009, the Senate Finance Committee votes on its health care legislation