ation to interested users, I. It is generally favorable for the company to have a high receivable turnover. Ill. It is generally favorable for the company to have a low sales period IV. A 27% debt ratio means that, 73% of the total resources in operation was provided by the creditors and 27% provided by the owners. a. lil ill and IV b. I land Ill only. c. I and

ation to interested users, I. It is generally favorable for the company to have a high receivable turnover. Ill. It is generally favorable for the company to have a low sales period IV. A 27% debt ratio means that, 73% of the total resources in operation was provided by the creditors and 27% provided by the owners. a. lil ill and IV b. I land Ill only. c. I and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When the allowance method of recognizing bad debt expense is used, the entries at the time collection of an account previously written off would a. Decrease the allowance for doubtful accounts b. Increase net income c. Have no effect on the allowance for doubtful accounts d. Have no effect on net income
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Which of the following is not one of the typical uses of financial ratios? a. Comparisons to a company’s historic values b. Comparison to benchmarksc. Comparison to competitors’ values d. Comparison to zero with positive values indicating desirable ratios and negative values indicating undesirable ratios.
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Debtor Turnover ratio does not consider O a. Sales O b. Out standing balance of customer O c. Sales return O d. GST
6 Within the context of the 5 Cs of credit, which of the following statements show the weakness of a company's capacity? Select ALL correct answers. Slowing inventory turnover Low debt to equity ratio Recent success in raising equity High funded debt-to-EBITDA ratio
If in February, MBB DID NOT take up any opportunity that the suppliers offered for early settlement discount, how would its performance be impacted? 1. Gross profit for February will decrease 2. Other things being equal, net cash flow from operating activities will decrease a) Neither of the above is correct b) Only statement 1 is correct c) Both 1 and 2 are correct d) Only statement 2 is correct
Which of the following statement is correct? O Inventory Turnover Ratio is a measure of how much the market is willing to pay (per share) for one dollar's worth of the firm's recorded earnings per share, and it is measure of the market's perception as to the future earnings potential of the firm. All the answers are incorrect. The times interest earned ratio is equal to Earnings Before Taxes (EBT) divided by Debt, and it is often used to assess a company's ability to service the interest on its debt with operating income from the current period. Asset activity ratios measure the ability of a firm to meet its short-term obligations. O When the investors have more confidence about the firm's future growth, then the higher P/E ratio is expected.
Which is not a potential problem of utilizing ratio analysis? A. trends and industry averages are historical in nature. B. financial data may be distorted due to price-level changes. C. firms within an industry may not use similar accounting methods. D. all of the above E. answer not given
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