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1 year ago

A company has the following ratios:

Business

1 answer:

Illusion [34]1 year ago

8 0

Answer:

The company has current ratio almost half than the industry average. This is an indication that the company has lesser current assets than industry average. The ability of the company to meet its short term obligations is not suitable as the other companies in the industry are maintaining double current ratio. The ratio should never go below 1 as if it does the company may face its operational financing and working capital management issues.

The debt to equity ratio is significantly higher than the other companies of the same industry. The industry average is 4 whereas the company has ratio 20. This is significantly higher which indicates that there is heavy burden of debt on the company. High debt/ equity ratio indicates high risks. Investors avoid investing in such companies which have high debt/ equity ratio.

Explanation:

The company can go for equity financing as it will also help reduce its debt / equity ratio. The company will become less riskier and financing will be divided in debt and equity. The debt burden on assets will be reduced. There can be reduction in certain debt covenants. The company can use equity financing to fund its operations as well as purchase of non current assets to increase production and ultimately profitability of the company could rise.

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The following information relates to the Quilt Division of TDS Corporation for last year: Sales $200,000 Contribution margin $90

irina [24]

Answer:

hi really dont know

6 0

2 years ago

At the beginning of the year, Brick Makers had cash of $183, accounts receivable of $392, accounts payable of $463, and inventor

Pie

Answer:

amount of the net source $15

Explanation: $Working\ capital= Current\ assets-Current\ liabilities$

$source\ of\ cash =[Cash+AR+Inventory]- [Amount\ Payable]$

cash = $183

received amount = $392

inventory =$714

payable amounts =$463

current assest = (183+392+714)-463=$826

current liabilities =(167+682+409-447)=$811

cash = $167

received amount = $409

inventory =$682

payable amounts =$447

current liabilities =(167+682+409-447)=$811

Hence since current liabilities is more than current assests, therefore there will be loss of accounts

Hence source of cash= (826-811) = $15.

7 0

2 years ago

A company uses an activity-based costing system composed of three processes: tooling, processing, and resources. The company has

Serga [27]

Answer:

d. $520,000

Explanation:

Provided information,

Activities Cost Cost drivers

Tooling $500,000 25 setups

Processing $2,000,000 20,000 direct labors

Resources $800,000 40,000 square feet

Rate per activity

Tooling = $\frac{500,000}{25} = $20,000 per setup$

Processing = $\frac{2,000,000}{20,000} = 100 per labor hour$

Resources = $\frac{800,000}{40,000} = 20 per feet.$

Information for Product D

3 setups = 3 $\times$ $20,000 = $60,000

3,000 direct labor hours = 3,000 $\times$ $100 = $300,000

8,000 square feet = 8,000 $\times$ $20 = $160,000

Total overhead cost assigned = $60,000 + $300,000 + $160,000 = $520,000

3 0

1 year ago

The fact that one department may be labor intensive while another department is machine intensive explains in part why multiple

serious [3.7K]

Answer:

That statement is true

Explanation:

Pre-determined overhead is the method of overhead calculation that being done at the beginning of each accounting period. They use the number based on estimation from the performance on the previous period.

Determining pre-determined overhead of a machine is far easier compared to human labor since machine tend to give stable performance.

Since larger companies tend to use more machines than smaller companies, pre-determined overhad is more common among larger companies and rarely found in smaller ones.

8 0

1 year ago

Below is a set of projects aimed at cleaning up a city's recreational areas.

Andru [333]

Answer:

North Park $13,000 $16,000 N

Upper River Beach 6,000 8,000 Y

South Shore 29,000 30,000 Y

Green Creek 900 1,300 N

Explanation:

The cleanup will happen in the area where the marginal benefit is more than the marginal cost. the North park will not be cleaned up. River beach will be cleaned Up. South shore will be cleaned up. Green creak will not be cleaned up.

3 0

2 years ago