El Dorado Inc. has monthly cash expenses of $168,500. On December 31, the cash balance is $1,415,400.a. Compute the ratio of cash to monthly cash expenses.b. Based on (a), what are the implications for El Dorado Inc.?

El Dorado Inc. has monthly cash expenses of $168,500. On December 31, the cash balance is $1,415,400.a. Compute the ratio of cash to monthly cash expenses.b. Based on (a), what are the implications for El Dorado Inc.?

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter8: Internal Control And Cash

Section: Chapter Questions

Problem 5PEB

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

El Dorado Inc. has monthly cash expenses of $168,500. On December 31, the cash balance is $1,415,400.
a. Compute the ratio of cash to monthly cash expenses.
b. Based on (a), what are the implications for El Dorado Inc.?

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