Fin622 GDB Solution Fall 2011

Question No:1

Solution:
1-Sweeping of Bank Accounts by company
2-Improved Current Asset by Rising Shareholder’s Funds
3-Sell-off Unproductive Assets by company
4-Pay off Current Liabilities
5-Faster Conversion Cycle of Debtors or Accounts Receivables
6-Increase in company cash balance with a long-term loan
7-Increase in current assets with new equity investments
8-Convertion fixed assets to cash by company
9-Pay off of some current liabilities


Question NO:2


he ideal current ration is supposed to be 2:1 means that current assests must be twice that that of current liabilities. If this ratio is less than 2:1 the short term financial position is not supposed to be too favourable but if its is more than this limit than it is showing idleless no working capital.
Here in this scenario
current ratio in 2009 is 1.2:1 
current ratio in 2010 is 1.96:1
conclusion
Although increase in current ratio is positive sign but ratios in both years don’t match the standard requirements