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Bec Formula Review With Questions And Verified Answers [Graded A+]

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BEC FORMULA REVIEW WITH QUESTIONS AND VERIFIED ANSWERS [GRADED A+] CURRENT RATIO - current assets divided by current liabilities What does current asset include? - Account receivable, cash inventory, prepaid expense QUICK ACID TEST RATIO - This one is more conservative. You're dealing with straight, fast cash Inventory and prepaid payment are excluded from the numerator. All the current asset except for inventory and prepaid payment / current liability. ©morren2026/2027.Year published 2026. OPERATING CASH FLOW - Can you pay your debt from your cash flow? Operating cash flow/current liability ACCOUNT RECEIVABLE TURNOVER RATIO - How good the company is at collecting money and not having to write off bad debts, this tells you about liquidity. Net sales / average balance of account receivable (net) DAYS SALES IN RECEIVABLE - how often the company receives money from sales that were on credit. Ending account receivable balance over net credit sales/ days in year INVENTORY - current asset - quick asset ACID TEST RATIO - Quick asset/ current liability ©morren2026/2027.Year published 2026.

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BEC FORMULA REVIEW WITH

QUESTIONS AND VERIFIED ANSWERS

[GRADED A+]



CURRENT RATIO - ✔✔current assets divided by current liabilities



What does current asset include? - ✔✔Account receivable, cash

inventory, prepaid expense



QUICK ACID TEST RATIO - ✔✔This one is more conservative. You're

dealing with straight, fast cash

Inventory and prepaid payment are excluded from the numerator.

All the current asset except for inventory and prepaid payment / current

liability.




©morren2026/2027.Year published 2026.

, OPERATING CASH FLOW - ✔✔Can you pay your debt from your cash

flow?

Operating cash flow/current liability



ACCOUNT RECEIVABLE TURNOVER RATIO - ✔✔How good the

company is at collecting money and not having to write off bad debts, this

tells you about liquidity.

Net sales / average balance of account receivable (net)



DAYS SALES IN RECEIVABLE - ✔✔how often the company receives

money from sales that were on credit.



Ending account receivable balance over net credit sales/ days in year



INVENTORY - ✔✔current asset - quick asset



ACID TEST RATIO - ✔✔Quick asset/ current liability




©morren2026/2027.Year published 2026.

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