A If a buisness makes a 350 purchase with a 210 net 30 provi

A. If a buisness makes a $350 purchase with a 2-10 net 30 provision. What is the effective annual interest rate if the business pays on day 11? On day 30?

B. Based on the information below, determine the Current Ratio for this facility and identify how this ratio compares to Optum (2017) for audited financial statements from 2015.

ASSETS 2014 2015 Current Assets: S 41 137 476 Cash and cash equivalent:s Short Tern Investments Accounts receivable, net Inventories S 74 147 727 27 $ 975 S125 Total current assets $676 Investments S 100 Property and Equipment: $ 56 70 S 126 (45) S 81 Medical and office equipment Vehicles 47 $ 101 (24) Total Less Net property and equipment Total assets S1,181 $853 LIABILITIES AND EQUITY Current Liabilities: S 13 Notes payable Accounts payable Accrued expenses S 13 40 496 S 549 337 S 371 Total current liabilities 167 Long-term debt Total liabilities 154 S 703 S 538 Equity (net assets) S 478 S315 Total liabilities and equity $1,181 $ 853

Solution

A) paid on 11 morning: discount 2% EAI rate= (2% / 10 days) * 365 = 73% paid on 30 day : discount provided NIL EAI rate = NIL B) Current Ratio for 2015 = current assets / current liabilities 676 / 371 = 1.82 The current ratio is a healthy one. Optum healthcare 2017, current ratio = 37084m / 50463m = 0.73 Optum have a negative current ration as less than 1.