II. Directions: Write TRUE if the statement is CORRECT; Write FALSE if thestatement is INCORRECT._1. Working capital is the same as net working capital._2. The amounts needed to compute a company's working capitalcome from Income Statement._3. The operating cycle for most companies will be longer than oneyear.4. Accounts Receivable affects the working capital of a company._5.Time as consideration is unimportant in inventorymanagement._6. Current assets should always be financed by current liabilities._7. Account receivable is also known as notes receivable._8. The financial manager of a firm is mostly interested in thecompany's available balance, not its book balance of cash._9. In accounts receivable management, credit analysis is theprocess of determining the probability that customers will not pay.10. Current asset is the asset that can be converted into cash within one

Working capital is referred to as the financial metric, which used to represent an operating…

Answered: II. Directions: Write TRUE if the…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 58BE

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Time series analysis involves comparing a company’s income statement and balance sheet forthe current year to its previous years’ income statements and balance sheets.Required:Explain whether it is always bad if a company’s cost of goods sold is increasing from year to year.
If a company was able to reduce its inventory level while keeping other things constant, we will see a change in which of the following accounting measures for liquidity? An increase in interval measure No change in any liquidity measure. A decrease in quick ratio An increase in cash ratio A decrease in current ratio
What does the current ratio inform you about a company? A. The efficient use of assets. B. The company's profitability. C. The extent of slow-moving inventories. D. The company's liquidity.
2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a…
Directions: Read each sentence carefully and detemine whether the statement is TRUE or FALSE. Write your answers onthe space provided before each number. 1. Profitability ratios measure the ability of the company's assets and invested capital to generate sales. 2. Čunent ratio is generally higher than quick ratio. 3. Using anothercompany as benchmark, the company with highernet profitmarginis more profitable. 4. Accounts receivable turnover measures the number of days in the company's average collections period. 5. Firancial statement analysis uses computational and analytical techniques to evaluate the company's risks, performance, financial health, and future prospects with the objective of making economic decisions. - 6. Given equal gross profit margin, the company with the better operating income margin has higher operating expenses as a percentage of sales. 7. Debt to equity ratio measures the percentage of assets financed by equity. 8. Gross profit margin provide an indication of…
What is the company's inventory in the opening balance sheet? What is the amount of the company's financial assets in the opening balance sheet? What is the company's working capital in the opening balance sheet? Calculate the company's total revenue. Calculate the sales margin for the fiscal year. Calculate the EBIT (operating profit) for the fiscal year. Calculate the net income (earnings) for the fiscal year. Calculate the cash flow from investments (CFinv) for the fiscal year. Calculate the cash flow from financing (CFfin) for the fiscal year. Calculate the change in working capital during the fiscal year. Calculate the cash flow from operations (CFops) for the fiscal year. Calculate the change in cash assets during the fiscal year. Calculate the change in financial assets during the fiscal year. Calculate the total amount of the closing balance sheet. Calculate the ROCE (Return on Capital Employed) describing the profitability of the operations. Calculate the gearing percentage…
Solve this one for general accounting
True or False. Answers only please 1. Inventory turnover is generally a more important ratio for a manufacturing firm than a service firm. 2. If a company has no liabilities, its return on equity will equal its return on assets.
which of the following is FALSE regarding a firm's financial statements? Inventory is part of current assets Accounts receivable represents the value of goods that were sold to customers, for which the company has not yet been paid The balance sheet shows the value of a company's assets and liabilities at a point in time The income statement shows a company's income and expenses over a period of time the balance sheet and income statement information can be used to calculate the market value of the common stock
Which of the following can lead to an increase in the net working capital of a firm? A. A decrease in inventory. B. An increase in accounts receivable. C. An increase in accounts payable. D. A decrease in the checking account balance.
50) Which of the following is true of the acid-test ratio? A) It measures a company's ability to pay its current liabilities. B) It measures the ability of the company to earn net income. C) It measures a company's ability to meet its short-term obligations with cash and cash equivalents. D) It indicates how much cash could be realized by selling the inventory. OA. It measures a company's ability to pay its current liabilities. OB. It measures the ability of the company to earn net income. OC. It measures a company's ability to meet its short-term obligations with cash and cash equivalents. D. It indicates how much cash could be realized by selling the inventory.
Compare the two companies in the areas of liquidity, working capital management, profitability, financial leverage, and efficiency. What can you learn about these two companies? Ratio Company A Company B Current Ratio 0.91 0.83 Quick Ratio 0.29 0.24 Days’ Sales Outstanding 35 43 Inventory Turnover 6.54 12.23 Gross Margin Percentage 25.38 24.38 Return on Assets 7.61 6.26 Return on Equity 33.55 19.32 Return on Sales 4.9 8.5 Debt/Equity Ratio 158.17 73.12 Interest Coverage 11.04 10.07 Revenue per Employee 258,824 308,631

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