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I need someone who learns accounting to help me complete this work. You have 1 day to complete it. Make sure that the correct rate is higher than 90%.

Question 1 (30%)

Quick questions

1. Please define what are the two main purposes of financial ratios. Explain who are the main users of this financial information.

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2. Please explain the difference between the sources and use of cash. Give at least two examples of each.

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3. Please explain the functions of a cash budget by mentioning three of them.

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4. Discuss three types of financial ratio categories. Explain what is the information extracted from them.

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5. Why are cash equivalents included on the statement of cash flows?

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Question 2 (35%)

Cash budget preparation

1- Prepare a cash budget for a company for April, May and June.

Question 3

Question 4

Acer company balance sheet lists the following items:

Cash: $10,000

Cash equivalents: $20,000

Accounts receivable: $5,000

Inventory: $30,000

Property & equipment: $50,000

Accounts payable: $12,000

Short-term debt: $10,000

Long-term debt: $20,000

1- Please calculate the current ratio of the company. Offer your expert opinion the ratio and what it says about how liquidity is managed.

2- Please calculate the cash ratio. How would you explain it ?

Cash budget preparation

Month

Sales

Purchases

Wages

Exp

 

 

Jan. (actual)

82 000

47 000

21 000

6000

Feb. (actual)

78 000

42 000

18 500

6500

Mar. (actual)

77 500

40 000

22 000

5750

Apr. Budget

88 000

51 000

22 500

6100

May.Budget

82 500

46 000

21 750

6250

Jun. Budget

79 000

37 000

19 000

6500

You are further informed that:

  • 10% of purchases and 20% of sales are for cash

The average collection period of the company is half a month and credit purchases are paid off regularly after one month.

Wages are paid half monthly and the rent, excluded in expenses, is paid monthly

  • Cash and bank balance on April 1 was 15 000$ and the company aims to keep it below this figure at the end of every. The excess cash is placed in fixed deposits.
  • With all theses informations, please prepare a cash budget for a company for April, May and June.