Match each ratio or percentage with its formula by entering the appropriate letter for each numbereditem. Ratios
Question:
Ratios or Percentages 1. Current ratio 2. Net profit margin 3. Inventory turnover ratio 4. Gross profit percentage Formula A. Net income ÷ Total revenue B. (Net sales revenue-Cost of goods sold) ÷ Net sales revenue C. Current assets ÷ Current liabilities D. Cost of goods sold Average inventory E. Net credit sales revenue Average net receivables F Net income Average number of common shares 5. Fixed asset turnover 6. Return on equity outstanding G. Total liabilities ÷ Total assets H. (Net income Interest expense Income tax 7. Times interest earned 8. Debt-to-assets ratio expense) ÷ Interest expense I. Current market price per share 9. Price/earnings ratio Earnings per share Receivables turnover ratio J. Net income Average total stockholders' equity 11. Earnings per share K. Total revenue Average net fixed assets
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1 C 2 A 3 ...View the full answer
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
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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