ECO 211 Study Guide - Pension
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ECO 211 Full Course Notes
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Financing acquisi,on of assets: debt from creditors and equity from owners. Debt is riskier because creditors can force a company into bankruptcy, since interest is a legal obliga:on. Lease permits lessee to purchase asset at a price that is lower than its fair market value. Quick ra,o (measures liquidity): quick assets (cash, marketable securi:es, a/r) / current liabili:es. A/p turnover ra,o (measures how fast management pays trade accounts): cost of good sold. Social security tax, medicare tax, income tax, state and local income tax, voluntary deduc:ons. Interest = principal * interest rate * time in years. Con,ngent liabili,es: poten:al liabili:es created due to a past event, i. e. lawsuits, environmental issues: probable (high possibility) If easily es:mated, record as a liability. Working capital = current assets - current liabili:es. If you are looking for the present value, then use the present value tables. A: use the annuity table if you are receiving a speci c amount each year.
