Cho Chang works as a Program Coordinator for Big Brothers / Big Sisters of Ameri
ID: 2494300 • Letter: C
Question
Cho Chang works as a Program Coordinator for Big Brothers / Big Sisters of America. She has assets valued at $25,000 of which $5,000 are investment assets, $15,000 are tangible assets, and the remaining $5,000 are monetary assets. Her monthly expenses are $2,500. From the data provided here, which of the following statements about Cho is accurate?
According to the Basic Liquidity Ratio, if Cho were to lose her job, she would be solvent.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she could continue meeting her expenses for 2 months.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she would be insolvent.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she could continue meeting her expenses for ½ month (or about 2 weeks).
According to the Basic Liquidity Ratio, if Cho were to lose her job, she would be solvent.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she could continue meeting her expenses for 2 months.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she would be insolvent.
According to the Basic Liquidity Ratio, if Cho were to lose her job, she could continue meeting her expenses for ½ month (or about 2 weeks).
Explanation / Answer
Liquidity ratio represents an individual's ability to meet committed expenses & it derives the time a person can meet his/her expenses with the assets available
Monetory Assets ( Cash & Cash Equivalent convertible into cash in short time ) / Total Monthly Expenses
Basic Liquidity Ratio = 2 months in this cash refer below
Ans - According to the Basic Liquidity Ratio, if Cho were to lose her job, she could continue meeting her expenses for 2 months.
a Monetory Assets 5000 b Investment Assets 5000 c Tangible Assets 15000 d Total Asset ( a+b+c) 25,000 e Monthly Expenses 2500 f Basic Liquidity Ratio (a / e ) 2Related Questions
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