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...
-
Controls have to be sophisticated to be effective. Present arguments for and against this statement. Conclude your paper with a persuasive argument why you agree or disagree with the statement.
-
Using a demand and supply diagram, explain why carbon prices fell at the beginning of the Emissions Trading Scheme (ETS), due to emissions allowances being too generous.
-
Imagine an economy in which consumer expenditure is represented by the following equation: C = 50 + 0.75DI Imagine also those investors want to spend $500 at every level of income (I = $500), net...
-
Discuss why liquidity is important to individual investors and to mutual funds?
-
Design and implement a C++ program that defines a base class A, which has a subclass B, which itself has a subclass C. The A class must implement a method, which is overridden in both B and C. You...
-
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.
-
Atman Enterprises assembles satellites using customer supplied parts and materials. A customer has asked Atman to bid on a new model of satellites and estimates purchasing eight units. Atman believes...
-
We've all had to navigate unforeseen solitude, but not everyone has felt this in the same way. What's the difference between being alone and being lonely? You may consult Merriam-Webster Dictionary...
-
What types of technology promote safe and effective patient care? How do you transform patient data into information and then knowledge for knowledge-based decisions? How can technology enhance...
-
Evaluate the limit. x lim X 3 X - 2 x - 4
-
A 3 in diameter, 1 2 in long cylindrical workpiece is to be turned down to 2 . 8 in in two identical passes on a CNC turning machine using feed f = 0 . 0 0 5 in / rev . The cut will be made with a...
-
At the same time of day, a flagpole casts a shadow that is 7 feet long and a 4-foot tall fencepost casts a shadow that is 1 foot long. How tall is the flagpole? (please enter your answer as a number)
-
a. Example 15-1: Finding the Effective Diffusivity of De Wolfram 1. Can you think up a question about the sliders that would be somewhat interesting? I am not sure I can, thats why there is no...
-
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?
-
You borrowed $ 1 1 , 0 0 0 from your bank to build a small cabin on your property . The bank will charge 1 0 % per year compounded quarterly . You decide to payoff this loan in 2 years making...
-
A n IOU for $ 1 , 0 0 0 can be cashed exactly five years from now. what is the present value, assuming a discount rate of 5 . 2 5 % compounded semiannually?
-
The US 1 year spot rate is 2.16% and the Mexican 1 year spot rate is 4.09%. A US investor purchases a Mexican corporate bond with an expected 1 year return of 9.67%, as measured in Mexican peso. The...
Study smarter with the SolutionInn App