The following data is given: Instructions Compute the following ratios: (a) Acid-test ratio at 12/31/11. (b) Receivables
Question:
The following data is given:
Instructions
Compute the following ratios:
(a) Acid-test ratio at 12/31/11.
(b) Receivables turnover in 2011.
(c) Inventory turnover in 2011.
(d) Profit margin on sales in 2011.
(e) Rate of return on common stock equity in 2011.
(f) Book value per share of common stock at12/31/11.
2 8 Accounts receivable (net) 3 Plant assets (net) Accounts payable Wages payable 10% Preferred stock, $40 par Common stock, S10 par 0 Net credit sales Cost of goods sold
Step by Step Answer:
a Acidtest ratio 117000 65000 Acidtest ratio 18 b Receivables turn...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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.
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