amount of working capital is solvent. This is a short run view since the focus is on the company’s current assets and its current liabilities. Others look at a company’s total assets and total liabilities or the...
amount of working capital is solvent. This is a short run view since the focus is on the company’s current assets and its current liabilities. Others look at a company’s total assets and total liabilities or the...
Where can I find financial ratios for my industry? One source for financial ratios by industry is the RMA Annual Statement Studies Financial Ratio Benchmarks. RMA is the acronym for Risk Management Association and...
assets in order to determine a company’s working capital. (Dividing current assets by the current liabilities is the company’s current ratio.) Examples of Current Liabilities The following are common examples of...
costing) is $39,000. Therefore, the manufacturer’s gross profit is $21,000 ($60,000 minus $39,000). The gross profit ratio or gross profit percentage is 35% (gross profit of $21,000 divided by net sales of $60,000)....
What are the reasons for high inventory days? Definition of Inventory Days I assume that inventory days is referring to the days’ sales in inventory. If so, then inventory days is also related to the inventory turnover...
of its current liabilities in the calculation of the company’s quick ratio. Examples of Quick Assets Common examples of quick assets include: Cash and cash equivalents Temporary marketable securities Accounts...
, it is assumed that cash was used. As a result, the amount of the decrease will appear on the SCF as a negative amount. For example, if Retained Earnings is decreased, it could be the result of declaring and paying a...
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
Our Explanation of Break-even Point illustrates how to determine the number of units or sales dollars that will result in zero net income. The techniques rely on a product's contribution margin or contribution margin...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
works as hard, but instead of a salary, draws $80,000 for personal use. The regular corporation pays a $10,000 cash dividend and its income tax rate is 15%. The income statement of the sole proprietorship will report...
Our Explanation of Working Capital and Liquidity provides you with an in-depth look at the components of working capital and the challenges of converting current assets to cash before obligations come due. You will see...
margin Return on assets Return on stockholders’ equity The inventory turnover ratio will be greater when LIFO is used during periods of increasing costs. The reason is that the cost of goods sold will be higher and...
What causes a variation in profit margin and turnover ratios between industries? Mega grocery stores, discount stores, and warehouse clubs often have small profit margins but have high turnover ratios. The small profit...
on hand (as opposed to relying on the quantity shown in the computer records). physical inventory This term describes the actual counting of the goods on hand (as opposed to relying on the quantity shown in the computer...
-term assets. Similarly, current liabilities are reported in a section that is separate from long-term liabilities. This allows bankers, owners, and others to easily compute the amount of an organization’s working...
What is sales mix? Definition of Sales Mix Sales mix is the relative proportion or ratio of a business’s products that are sold. Sales mix is important because a company’s products usually have different degrees of...
_________________ ratio. TURNOVER ETOVNRUR Unscramble TURNOVER EORRVUNT Unscramble Mark the Word Scramble as Complete Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at your...
is the inventory ______________ ratio. TURNOVER RTNVEOUR Unscramble TURNOVER UTRVRNEO Unscramble 10. The expected selling price in the ordinary course of business minus the estimated costs of completion, disposal, and...
of $0 on an income statement prepared using the accrual method of accounting. The break-even point expressed in dollars of revenues is calculated by dividing the company’s total fixed expenses for the accounting...
Why is inventory turnover important? Definition of Inventory Turnover A company’s inventory turnover is often expressed as the company’s cost of goods sold for a year divided by the average cost of inventory during...
for a period of time by the contribution margin per unit of product. Mark as wrong Mark as right break-even point in dollars This is the result of dividing a company’s fixed expenses for a period of time by the...
working capital is $30,000. Current Ratio The current ratio is calculated as current assets divided by current liabilities. If a corporation has $150,000 of current assets and $120,000 of current liabilities, its...
proprietor for the owner’s personal use. It is not a business expense. owner's draw (or) owner's withdrawal This is a distribution of business cash (or other asset) to the sole proprietor for the owner’s...
important because of its effect on the following: Cost of goods sold for more than one accounting period The amount of a company’s current assets The company’s working capital The company’s current ratio Join PRO...
and administrative, and interest expenses. Gross Margin Can be an Amount or a Percentage Gross margin could be expressed as: An amount (also known as gross profit) A percentage of net sales (also known as gross profit...
Unscramble 15. Paid-in capital is one section of ________________' equity. STOCKHOLDERS TODESLKHCSRO Unscramble STOCKHOLDERS TCKDOSLSREHO Unscramble 16. The amounts to calculate the debt to equity ratio are found...
What is net working capital? Definition of Net Working Capital Net working capital is the amount (as opposed to being a ratio) remaining after subtracting a company’s total amount of current liabilities from its total...
share (or) EPS This widely used metric is a corporation’s net income minus its preferred dividend requirement (if any) divided by the weighted average number of shares of common stock outstanding. earnings per share...
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
as right working capital (or) net working capital This is defined as current assets minus current liabilities. working capital (or) net working capital This is defined as current assets minus current liabilities. Mark...
as the __________ __________ __________ sold. 20. The annual cost of goods sold divided by the average inventory during the year is the formula for the inventory __________ ratio. Any questions left unanswered will be...
Prepaid insurance 35. When a corporation declares a dividend on its common stock, which stockholders’ equity account’s normal balance will be reduced? Select... Common Stock Investments Retained Earnings Treasury...
are FOB __________. 6. FIFO is an inventory __________ __________ assumption. 7. When a company uses FIFO, its inventory might be reported at the lower of __________ or __________ __________ __________. 8. The inventory...
ratio is computed by dividing the net credit __________ sales for the year by the average amount of accounts receivable during the year. 28. The days' sales in accounts receivable is calculated by dividing...
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