26. True or False: Firms generally prefer to have a positive working capital (current assets - current liabilities). a. True b. False 27. True or False: Purchasing direct materials on account (i.e. buy now, pay later), all else equal, would decrease a firm's ROI (NOI/average operating assets). a. True b. False 28. True or False: All else equal, an increase in the cost of sales commissions would decrease both a MO firm's gross profit margin % (Gross Margin/Sales) and a firm's net profit margin % (Net Income/Sales). a. True b. False

26. True or False: Firms generally prefer to have a positive working capital (current assets - current liabilities). a. True b. False 27. True or False: Purchasing direct materials on account (i.e. buy now, pay later), all else equal, would decrease a firm's ROI (NOI/average operating assets). a. True b. False 28. True or False: All else equal, an increase in the cost of sales commissions would decrease both a MO firm's gross profit margin % (Gross Margin/Sales) and a firm's net profit margin % (Net Income/Sales). a. True b. False

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 6MC: Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC)....

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26. True or False: Firms generally prefer to have a positive working capital (current assets - current liabilities). a. True b. False 27. True or False: Purchasing direct materials on account (i.e. buy now, pay later), all else equal, would decrease a firm's ROI (NOI/average operating assets). a. True b. False 28. True or False: All else equal, an increase in the cost of sales commissions would decrease both a Mo firm's gross profit margin % (Gross Margin/Sales) and a firm's net profit margin % (Net Income/Sales). a. True b. False
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Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?
Karan Subject: accounting