1a.
The difference between the current assets and current liabilities of the company is represented by
Working capital
2a.
The relationship between net credit sales and average
Accounts receivable turnover
3a.
Times interest earned ratio indicates how many times the interest charges are covered by the profits available to pay interest charges. A high times interest earned ratio usually indicates that a company is performing well and is less risky, and vice versa.
Time interest earned ratio
4a.
The relationship between net income and net sales is established by the net profit margin ratio. It displays the net income earned as a percentage of net sales. Investors can use the net profit margin ratio to compare the performance of the company among competitors.
Net profit margin percentage
5.
Ratio analysis is a tool for determining the relationship between various items. It is used to assess a company's financial performance using values from the income statement,
The preference of the management.
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Chapter IE Solutions
MANAGERIAL ACCOUNTING LL W/ CONNECT
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- On the 5th of the month, Greg Marketing pays its field sales personnel a 3% commission on the previous month's sales. Sales for March 2016 were $1,200,000. What is the entry at the end of March to record the commissions? A. Debit Sales - 36,000$; Credit Sales Commission Expense - 36,000$ B. Debit Sales Commission Expense - 36,000$; Credit Sales Commissions Payable - 36,000$ C. Debit Sales Commission Expense - 36,000$; Credit Accounts Receivable - 36,000$ D. Debit Sales -36,000$; Credit Sales Commission Income - 36,000$arrow_forwardNet profit is calculated in which of the following account? A) Profit and loss account B) Balance sheet C) Trial balance D) Trading accountarrow_forwardThe debts which are to be repaid within a short period (a year or less) are referred to as, A) Current Liabilities B) Fixed liabilities C) Contingent liabilities D) All the abovearrow_forward
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