Financial Management: Theory & Practice (MindTap Course List)
15th Edition
ISBN: 9781305632295
Author: Eugene F. Brigham, Michael C. Ehrhardt
Publisher: Cengage Learning
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Chapter 12, Problem 2Q
Summary Introduction
To choose: The items which rises spontaneously with rises in sales.
Expert Solution & Answer
Explanation of Solution
Accrued wages, accounts payable and accrued taxes rise spontaneously.
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Students have asked these similar questions
Which one of the following is an advantage of LIFO?
a. In periods of rising prices, less income taxes are paid
b. In periods of rising prices, more holding gains are reported in net income
c. Record keeping and financial statement preparation are easier
d. Conservative income statement and balance sheet disclousures result from falling prices
During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power gain will be recognized if the account is a:
a. Monetary liability
b. Monetary asset
c. Nonmonetary liability
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Comment on the following statements with suitable example:
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assets in the denominator. Explain how each part of the ratio could
cause return on assets to fall.
ii. Explain how return on assets could decline, given an increase in net
profit margin.
iii. If quoted market prices are not available, a personal financial
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Chapter 12 Solutions
Financial Management: Theory & Practice (MindTap Course List)
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- 16. What do you call for the likelihood of loss due to customers are not paying their amounts owing? a. Discount risk b. Credit risk c. Payment risk d. Loss riskarrow_forwardWhich one of the following statements is correct? A. If a firm decreases its inventory period, its accounts receivable period will also decrease. B. The longer the cash cycle, the more cash a firm typically has available to invest. C. A firm would prefer a negative cash cycle over a positive cash cycle. D. Decreasing the inventory period will also decrease the payables period. E. Both the operating cycle and the cash cycle must be positive values.arrow_forwardWhich one of the following is a measure of long term solvency? A. Price earning ratio B. Profit margin C. Cash coverage ratio D. Receivables turnover E. Quick ratioarrow_forward
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