Flashcards in Current Assets & Liabilities Deck (11)
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1
What is a current asset?
Cash plus other assets that are expected to be sold or converted to cash during the current operating cycle
Includes: Demand deposits, cash equivalents, accounts receivable, inventory, pre-paids, and short-term investments
2
What is a current liability?
A liability expected to be paid within 12 months or less
3
How is the Quick Ratio calculated?
(Cash + A/R + Trading Securities) / Current Liabilities
4
How is the Current Ratio calculated?
Currents Assets / Current Liabilities
5
How is Working Capital calculated?
Currents Assets - Current Liabilities
6
How is A/R Turnover calculated?
Credit Sales / Average A/R
7
How is Inventory Turnover calculated?
COGS / Average Inventory
8
How is Day Sales in Inventory calculated?
365 / Inventory Turnover
9
How is Days to Collect A/R calculated?
Average A/R / Average Sales per Day
10
How are gain contingencies recorded?
They are NOT accrued due to Conservatism
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