The accounts receivable turnover and inventory turnover are used to analyzelong-term solvency.profitability.liquidity.O leverage.

Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Answered: The accounts receivable turnover and…

The accounts receivable turnover and inventory turnover are used to analyze O long-term solvency. O profitability. liquidity. O leverage.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 15Q: What insights can be gained from inventory ratio analysis, such as inventory turnover ratio and...

See similar textbooks

Related questions

Q: Please help with the calculation of Net profit margin, Gross profit margin, Current ratio, Acid test…

A: Net profit margin = Net profit (loss) / Sales Revenue = - 1410 / 5600 = - 0.25 Given Net income =…

Q: In generating a pro forma balance sheet, on what is the percentage of salesmethod based?

A: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the…

Q: Accounts receivable turnover %3D

A: Sample company's balance sheet and income statement is given. On the bases of data we can find…

Q: Which of the following assumptions is assumed in the percent of sales forecasting method? All…

A: The percent of sales method is a financial forecasting system in which all of a business's accounts…

Q: What is removed from current assets in order to calculate the Quick Ratio? marketable securities…

A: Quick ratio = (Total current Assets - Inventory) / Total current liabilities

Q: Explain how the inventory cost flow assumption that was utilized might have an impact on liquidity…

A: Inventory Cost Flow Assumptions refer to the many ways for determining the cost of inventory sold…

Q: Capital structure refers to a measure of how long it takes to convert inventory into cash. O True…

A: Cpaital Structure :— Capital Structure is refers to the specific Mix of Debt and Equity used to…

Q: Current ratio Quick ratio Debtors collection period Inventory turnover Creditors payment period

A: We will be applying the following accounting formulas: Current Ratio= Current Asset/ Current…

Q: Describe implications of valuing inventory at net realizable value for financial statementsand…

A: Net realizable value means the value at which the inventory can be sold in the market reduced by the…

Q: Determine if each statement represents the allowance (A) or direct write-off (DW) approach. On the…

A: The Answer

Q: Options I have for denominator are - average accounts receivable, net average total assets cost…

A: The profit margin ratio can be calculated by dividing profit by net sales. It indicates the…

Q: Define Receivables turnover ratio with example.

A: Receivables turnover ratio: It refers to the accounting ratio that shows the efficiency of a firm of…

Q: Calculate current ratio, quick ratio and receivable turnover ratio

A: Current assets = 38,761 Current liabilities = 6,850 Inventory = 6,300 Prepaid expense = 800 Average…

Q: When is LIFO Inventory a preferred method? **In regards to Financial Accounting.

A: LIFO (Last in, First out ) : It is an accounting method that an organization uses to determine the…

Q: Explain how to calculate accounts receivable turnover ratio.

A: Accounts receivable turnover: Accounts receivable turnover is a liquidity measure of accounts…

Q: Define each of the following terms:e. Inventory conversion period; average collection period;…

A: Inventory conversion period The time between the day when the materials are purchased and the day…

Q: The receivables turnover ratio is a measure of: Multiple Choice O O O Asset value. Profitability.…

A: Introduction: Receivables turnover ratio The receivables turnover ratio evaluates the effectiveness…

Q: Which of the following is a measure of profitability?a. Quick (acid-test) ratiob. Net salesc.…

A: Profitability is that position of the company were the revenue earned is over the expenses incurred…

Q: Which of the following ratios is a measure of solvency? Multiple Choice Total asset turnover.…

A: Ratio Analysis - The ratio is the technique used by the prospective investor or an individual or…

Q: Explain why the percentage-of-receivables method is referred to as the balance sheet method and the…

A: Percentage-of-receivables method: It is a method of estimating the bad debts (loss on extending…

Q: . Which one of the following defines the cash cycle? A. Inventory period plus the accounts…

A: Cash cycle:It refers to the time it takes for a firm to turn raw materials into cash.

Q: The effects of purchasing inventory on credit are to:a. increase assets and increase liabilities.b.…

A: Inventory is the very important asset for the business. It can be purchased in cash or on credit.

Q: What factors affect accounts payable turnover ratio?

A: Accounts Payable ratio is calculated by dividing total supplier purchases by the average accounts…

Q: relationship would you expect between inventory and accounts payable

A: Relationship between inventory and accounts payable:- The main connection between the inventory…

Q: how value drivers (Return on Equity, Net Profit Margin, and Total Asset Turnover) are related to…

A: Financial statements: Financial statements are the summary of transactions presented in the form of…

Q: The best approach to measuring liquidity takes into account changes over time in both liquidity…

A: Liquidity ratios: They are considered as an important class of metrics in finance which is used to…

Q: How to calculate net profit margin in pro forma balance sheet

A: Financial statements are referred as the records of the business operations and financial…

Q: The balance sheet account that is usually reported at its fair market value is: a. Short-term…

A: The assets can be classified fixed assets and current assets. The assets are recorded in balance…

Q: Choose Current ratio Asset turnover ratio Inventory turnover ratio Receivables turnover ratio

A: Liquidity ratios: Liquidity ratios measure the short-term capacity of a company to pay its maturing…

Q: Two bases for estimating uncollectible accounts are: Select one: O A percentage of recelvables and…

A: Accounts receivable: Accounts receivable refers to the amounts to be received within a short period…

Q: Which of the following ratios would a lender find most useful in monitoring a porrower's ability to…

A: Analysis of various options: 1) P/E ratio - It is used for measuring the price of the stock of a…

Q: Which of the following items in the balance sheet does NOT have a constant relationship with sales…

A: In the percentage of sales method, we forecast line items for the future by using the historical %…

Q: Which of the following is a solvency ratio? a. Times interest earned. b. Inventory turnover ratio.…

A: The correct option is (A) Times Interest Earned Explanation: This ratio is the measure of a…

Q: A bank that is examining the ratio of annual costs of goods sold to average inventory, is examining…

A: Financial ratios: Financial ratios are performance measurement methods used by company to Measure…

Q: Accounting Elements that affect receivables - discount, returns and valuations

A: Accounting elements that affect Receivables, discount,returns and valuations are credit…

Q: How to calculate the account receivable turnover ratio in a balance Sheet and income statement…

A: The records owed turnover proportion, otherwise referred to as the borrower's turnover proportion,…

Q: or each of the following accounts, give key risks, relevant assertions and how to test those…

A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three…

Q: What is meant by liquidity? Rank the following assets from one to five in order of liquidity.…

A: Liquidity is the time period within which an asset can be converted into Cash or a Liability is…

Q: MAKE A BASIS AND DISCUSSION ON THE EFFICIENCY RATIO OF NESTLE (ASSET TURNOVER, INVENTORY TURNOVER,…

A: Efficiency ratios are the ratios that are calculated to check the efficiency of the organization or…

Q: Calculate the asset efficiency - receivables turnover ratios, inventory turnover ratios, fixed asset…

A: Receivable Turnover ratio = Revenue/Receivables 2019 = 5,655,661/2,515,982 = 2.248 2020 =…

Q: What are the key variables that influence a company’s investment in receivables?

A: The variables that influence the company investment in receivables are as follows, The level of…

Q: Which of the following best describes the activities of the accounting function? a. inventory…

Q: Describe the assumptions of inventory cash flows.

A: The inventory cost flow assumption states that the cost of an inventory item changes from when it is…

Q: Current liabilities affect a company’s liquidity. What is liquidity, and how do we evaluate it?

A: Current liabilities are the liabilities that is paid within a year by the company.

Q: can be helpful for managers to understand short-term cash obligations. A) Profitability ratios B)…

A: Ratio analysis is the measure of company performance, by measuring different ratios.

Question

100%

The accounts receivable turnover and inventory turnover are used to analyze
long-term solvency.
profitability.
liquidity.
O leverage.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customers
What insights can be gained from inventory ratio analysis, such as inventory turnover ratio and number of days sales in inventory ratio?
Which of the following is not an element of the financial statements? A. future potential sales price of inventory B. assets C. liabilities D. equity
Assess the company’s level of liquidity and comment on its ability to meet its short-termfinancial obligations using the following ratios d. Accounts Receivable Turnover ratioe. Inventory Turnover Ratio
Please solve for PART A (liquidity’s current ratio, account receivables turnover, and inventory turnover/profitability’s profit margin, asset turnover, return on assets, and earnings per share) and PART B (return on common stockholder’s equity, debt to assets ratio, and price earnings ratio)
Explain the major financial ratios and financial cycles, debt ratio, debt to equity ratio, return on assets, return on equity, current ratio, quick ratio, inventory turnover, days in inventory, accounts receivable turnover, accounts receivable cycle in days, accounts payable turnover, accounts payable cycle in days, earnings per share (EPS), price to earnings ratio (P/E), and cash conversion cycle (CCC) and state the significance of each for financial management. Include examples based on a hypothetical balance sheet and income statement.
Explain the major financial ratios and financial cycles, debt ratio, debt to equity ratio, return on assets, return on equity, current ratio, quick ratio, inventory turnover, days in inventory, accounts receivable turnover, accounts receivable cycle in days, accounts payable turnover, accounts payable cycle in days, earnings per share (EPS), price to earnings ratio (P/E), and cash conversion cycle (CCC) and state the significance of each for financial management. Include examples based on a hypothetical balance sheet and income statement. Can CCC be negative? If so, what does it indicate?Explain working capital and its significance. Evaluate working capital in your example given in part “a”. Perform a vertical financial analysis incorporating :Debt ratio Debt to equity ratio Return on assets Return on equity Current ratio Quick ratio Inventory turnover Days in inventory Accounts receivable turnover Accounts receivable cycle in days Accounts payable turnover Accounts payable cycle in…
Explain the major financial ratios and financial cycles, debt ratio, debt to equity ratio, return on assets, return on equity, current ratio, quick ratio, inventory turnover, days in inventory, accounts receivable turnover, accounts receivable cycle in days, accounts payable turnover, accounts payable cycle in days, earnings per share (EPS), price to earnings ratio (P/E), and cash conversion cycle (CCC) and state the significance of each for financial management. Include examples based on a hypothetical balance sheet and income statement. Can CCC be negative? If so, what does it indicate? Explain working capital and its significance. Evaluate working capital in your example given in part “a” of this DQ2.
What is the accounts receivable turnover? What is the inventory turnover?
The following ratios are indicators of liquidity ,except_______ Group of answer choices current ratio asset turnover accounts receivables turnover inventory turnover ratio
Which of the following assumptions is assumed in the percent of sales forecasting method? All balance sheet assets accounts are tied directly to sales. Accounts receivables and inventory are tied directly to sales. Preferred stock and long-term debt are tied directly to sales. Fixed assets, but not current assets, are tied directly to sales.
A bank that is examining the ratio of annual costs of goods sold to average inventory, is examining which category of ratios? a.Profit measures b.Operating efficiency measures c.Liquidity measures d.Expense control measures