Before computing the current ratio, the accounts receivable turnover and the inventory turnover should be computed. Why?
Question:
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
Accounts receivable and inventory are often major segments of current assets Therefore th...View the full answer
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
Students also viewed these Accounting questions
-
Problem 1 (7 Points) For each of the following questions, base your answers on information that may be found in the 10-K filings of MGM Resorts International (Ticker: MGM), Caesar's Entertainment...
-
Mugs Company Comparative Balance Sheet December 31, 2007 2007 2006 Assets Cash $ 25,000 $ 40,000 Marketable securities 20,000 60,000 Accounts Receivable (net) 40,000 30,000 Inventory 150,000 170,000...
-
Why would the accounts receivable turnover ratio be different between Wal-Mart and Procter & Gamble? Discuss.
-
Access various employment Web sites (for example, www.monster.com and www.dice.com ) and find several job descriptions for a database administrator. Are the job descriptions similar? What are the...
-
After meeting with Cher Ware and Hy Perteks to discuss reporting needs, Anna has identified the fields for the partially completed NEW SOFTWARE INSTALLED REPORT. Design (or modify) the report to...
-
The value of an oil and gas company is tied to two fundamental facts. The first is the amount of oil and gas the company is presently producing. This amount, along with unit prices, determines the...
-
How long does it take an ambulance to respond to a request for emergency medical aid? One of the goals of one study was to estimate the response time of ambulances using warning lights (Ho \&...
-
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:...
-
Suppose that there are three firms in a region that are producing a common emission. The marginal abatement cost (MAC) for each firm is given by: MAC1 240-2E1 MAC2 192-1.6E2 MAC3 = 320 -2.67E3 The...
-
Nikos borrowed $6000 for 24 months from his bank using an discount note. (a) How much interest did Nikos pay the bank for the use of the money? (b) How much did he receive from the bank? (c) What was...
-
Does the allowance method for bad debts or the direct write-off method result in the fairest presentation of receivables on the balance sheet and the fairest matching of expenses against revenue?
-
Before computing the acid-test ratio, compute the accounts receivable turnover. Comment.
-
Using the output from Exercise 11.8, interpret the results as if they were significant. (What is one of the reasons that this current analysis is not likely to be significant, even if those...
-
Explain the accounting measurement principles of each of the following: (a) going concern; (b) accruals; (c) consistency; (d) the concept of prudence.
-
What does the following code fragment print? String string1 = "he11o"; String string2 = string1; string1 = "wor1d"; StdOut.println(string1); Std0ut.println(string2);
-
Explain how the structure of the balance sheet corresponds to the accounting equation.
-
What are the main headings to be found in most company balance sheets?
-
The following technical terms appear for the first time in this Supplement. Check that you know the meaning of each. Profit l Credit purchase Sales revenue l Creditor Cash sale l Trade payable Credit...
-
Define the major variables marketers use to segment consumers, and provide an example of how each variable can be applied in a social media application.
-
Cassandra Casey operates the Futuristic Antique Store. She maintains subsidiary ledgers for accounts payable and accounts receivable. She presents you with the following information for October 2019:...
-
Secondary and primary research data and information are both important in destination management research. How would you differentiate these two concepts?
-
Describe two errors that are counterbalanced in the following period.
-
Describe two errors that are not counterbalanced in the following period.
-
Why does a company correct errors even after they have counterbalanced?
-
3. Prove that Sin2x = 2corr CSC x is an identity. 4. Determine the solutions to the equation tan x = 3 - 2tanx for 0 x 2 accurate to two decimal places. 5. A sine function has an amplitude of 3, a...
-
Accountability refers to what you need to feel accountable/ responsible/ answerable for pursuing your goal. Instructions: In the space provided, below, indicate how you will be accountable for...
-
What is the gross yearly income? 2. What is the gross monthly income using this pay rate?
Study smarter with the SolutionInn App