a.
Vertical Analysis:
In vertical analysis, every line item is represented as a percentage of a base amount which can be either total assets, total liabilities, total equities, etc.
Requirement 1
To compute:
Cash as a percentage of total current assets, total current liabilities, total
b.
Horizontal Analysis:
In a horizontal analysis, a single line item is represented and compared as a percentage change from one base year to the subsequent years.
Requirement 2
To compute:
Percentage change between the beginning and ending cash balances for the current year.
c.
Days’ sales uncollected:
This ratio defines how fast a company converts its receivable into known amounts of cash. The lesser the ratio is, the better it is for the company as it will prove that the company employs an efficient system of cash collection from customers.
Requirement 3
To compute:
The days’ sales uncollected for both the current and prior year.
d.
Changes in Days’ sales uncollected:
The changes in the ratio of days’ sales uncollected will greatly impact the liquidity problem of the entity. If it is reduced, the company is considered to be efficiently managing its cash collection mechanism or in case, it is increased, the otherwise will follow.
Requirement 4
Whether S’s receivables collection is showing a favorable or unfavorable change.
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Chapter 6 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
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- A local bakery sells 12,000 loaves of sourdough bread each year. The loaves are ordered from an outside supplier, and it takes 4 days for each shipment of loaves to arrive. Ordering costs are estimated at $18 per order. Carrying costs are $6 per loaf per year. Assume that the bakery is open 300 days a year. What is the maximum inventory of loaves held in a given ordering cycle?arrow_forwardGiven solution for General accounting question not use aiarrow_forwardPlease provide correct solution and accounting questionarrow_forward
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- What is the machine's book value at the end of 20X4?arrow_forwardAccounting solutionarrow_forwardA local bakery sells 12,000 loaves of sourdough bread each year. The loaves are ordered from an outside supplier, and it takes 4 days for each shipment of loaves to arrive. Ordering costs are estimated at $18 per order. Carrying costs are $6 per loaf per year. Assume that the bakery is open 300 days a year. What is the maximum inventory of loaves held in a given ordering cycle?arrow_forward
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