ADM 1300 Study Guide - Midterm Guide: Accounts Payable, Working Capital, Accounts Receivable

• School: University of Ottawa
• Department: Administration
• Course: ADM 1300
• Professor: Devinder Gandhi

Document Summary

Brief exercise 2-1 (a) (b) (c) (d) (e) (f) (g) (h) Working capital: (i) (j) (k) (l) (m) (n) (o) (p) (q) Copyright 2014 john wiley & sons canada, ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. The working capital more than doubled in 2012 and the current ratio increased substantially when compared to 2011. Indigo"s liquidity has improved in 2012 compared with 2011. Debt to total assets ratio: (,566. 8 + . 8) = 51. 2% (,337. 4 + ,115. 8) (. 4 + . 4) = 49. 6% (,242. 2 + ,684. 0) (b) The company"s solvency was weaker in 2012 compared with 2011 because total debt has increased as a proportion of total assets. The decrease in profit and in the earnings per share during the year would indicate that profitability has deteriorated in 2012. In spite of the decline in profit, investors appear to have more confidence in leon"s future profit as indicated by the increase in the price-earnings ratio in 2012.