Financial management

The constraint at johngrass corp is time on a particular machine the company makes three products that use this machine data concering the prodcuts appears below

VT UV LQ

Selling price per unit $100 $30144 $48427

variable cost per unit $7776 23376 39363

minutes on the constraint 160 48 79

if sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product up to how much should the company be willing to pay to aquire more of the constained resource?

There are two ratio that are used: The Current Ratio and the Quick Ratio

A result of “2” for either ratio means that the company has twice as many current assets as current liabilities So liquidity would be excellent

What are the negatives if these ratios continued to increase to say 3 or 4?

Solution:

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