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(a)
Introduction:
Time interest earned ratio measure the ability of the company to meet its obligations of debt. It is the ratio of operating income to interest expense.
To state:
If increase in time interest earned ratio is a good or bad news for the company.
(b)
Introduction:
The average days to sell inventory measures the number of days company takes to convert its inventory into assets.
To state:
If decrease in days to sell is a good or bad news for the company
(c)
Introduction:
Gross profit percentage helps the company to compare gross margin to the net sales. This ratio tells the profitability at which company sells its inventory.
To state:
If increase in gross profit percentage is a good or bad news for the company
(d)
Introduction:
Earnings per share (EPS) is profit of the company which isdividedby common stock per share. Earnings per share acts as an indicator of a company's profitability.
To state:
If decrease in EPS is a good or bad news for the company
(e)
Introduction:
Fixed Asset turnover ratio calculates the ability of a company to generate sales with the fixed assets. A decline in the ratio means company has overinvested the amount in the fixed assets.
To state:
If increase in fixed asset turnover ratio is a good or bad news for the company
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Chapter 13 Solutions
Managerial Accounting
- I need help solving this general accounting question with the proper methodology.arrow_forwardI am searching for the accurate solution to this general accounting problem with the right approach.arrow_forwardDonovan Manufacturing has an overhead application rate of 145% and allocates overhead based on direct material cost. During the current period, direct labor cost is$63,500 and direct materials used cost is $82,000. Determine the amount of overhead Donovan Manufacturing should record in the current period. Solutionarrow_forward
- Please explain the solution to this general accounting problem with accurate principles.arrow_forwardDuring June, the production department of a process operations system completed and transferred to finished goods a total of 82,000 units of product. At the end of May, 18,000 additional units were in process in the production department and were 70% complete with respect to materials. The beginning inventory included a materials cost of $92,400 and the production department incurred a direct materials cost of $276,800 during June. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.arrow_forwardExplain the difference between the accrual basis and cash basis of accounting. What are the advantages and disadvantages of each method?arrow_forward
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,