The core business of Green Apple Ltd involves the sale of anti-virus software
PART B. Income and Revenue
The core business of Green Apple Ltd involves the sale of anti-virus software. The following took place during the financial year ended 30 June. The company earned $25 000 000 from the sale of software; $3 000 000 from update downloads; and $50 000 in interest from investing on the short-term money market. The company also received a $2000 discount arising out of the early settlement of a liability; and issued shares in exchange for $500 000 cash during the year.
– quick ratio;
– accounts receivable turnover (times and in days); and
– inventory turnover (times and in days).
b. Comment on the short-term solvency, including the efficiency of the business, given the ratio results obtained in your answer in part a.
Discuss whether the foregoing five financial items would meet the definition of income to the company during the year? Give reasons for your answer.
Which, if any, of the items would meet the definition of revenue to the company for the year? Give reasons for your answer.
Hint
Accounts & Finance A solvency ratio represents a prime metric employed in the measurement of an enterprise's capacity to fulfill debt obligations and acquires much use by prospective entrepreneurial lenders. This ratio illustrates whether a corporation's cash flow is enough to fulfill its long-term and short-term liabilities....
A solvency ratio represents a prime metric employed in the measurement of an enterprise's capacity to fulfill debt obligations and acquires much use by prospective entrepreneurial lenders. This ratio illustrates whether a corporation's cash flow is enough to fulfill its long-term and short-term liabilities.
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