Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 1RQ
According to some estimates, the volume of electronic commerce transactions exceeds $3 trillion. Business-to-business transactions account for almost half of this amount. What changes do you believe are in store for
Expert Solution & Answer
To determine
Explain about the changes in store for managerial accounting as a result of the explosion in e-commerce.
Explanation of Solution
Managerial accounting: Managerial accounting is a system, or a process of collecting and organizing, classifying, and analyzing the financial reports, and communicating the relevant information to the managers of the company to achieve the objectives and goals of the organization.
- The explosion in e-commerce will create an impact in managerial accounting in significant ways. Drastic decrease in paper work is one of the effects. Millions of transactions conducted electronically among businesses without hard-copy documentation. Along with this method comes the significant issue of information security while communicating about business transactions.
- It is the duty of businesses to find out ways for protecting its confidential information in its own computers. But at the same time, it must share certain information that is required for completing the transactions.
- Another effect of e-commerce is that the business transactions can be conducted with dramatic speed. Furthermore, there is dramatic change in the procedures of managerial accounting in addition to these business-to-business transactional issues. For example, e-budgeting, this is the enterprise-wide and electronic completion of a company’s process of budgeting.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Kiley Corporation had the following data for the most recent year (in millions). The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered? (Hint: Calculate the CCC for original and then for revised and take the difference. SHOW ALL WORK)
Kiley Corporation had the following data for the most recent year (in millions). The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?
Original
Revised
Annual sales: unchanged
$110,000
$110,000
Cost of goods sold: unchanged
$80,000
$80,000
Average inventory: lowered by $4,000
$20,000
$16,000
Average receivables: lowered by $2,000
$16,000
$14,000
Average payables: increased by $2,000
$10,000
$12,000
Days in year
365
365
Computer Associates International, Inc., the world's leading business software company, delivers the end-to-end infrastructure to enable e-business through innovative technology, services, and education. Recently, Computer Associates had 19,000 employees worldwide and revenue of over $6 billion.
The following information is from the company's annual report.
The Company has experienced a pattern of business whereby revenue for its third and fourth fiscal quarters reflects an increase over first- and second-quarter revenue. The Company attributes this increase to clients' increased spending at the end of their calendar year budgetary periods and the culmination of its annual sales plan. Since the Company's costs do not increase proportionately with the third- and fourth-quarters' increase in revenue, the higher revenue in these quarters results in greater profit margins and income. Fourth-quarter profitability is traditionally affected by significant new hirings, training, and…
Chapter 1 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 1 - According to some estimates, the volume of...Ch. 1 - Prob. 2RQCh. 1 - List and define the four basic management...Ch. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - List and describe four important differences...Ch. 1 - Distinguish between cost accounting and managerial...Ch. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - How could your college or university use the...
Ch. 1 - What does the following statement by a managerial...Ch. 1 - What is meant by the following statement?...Ch. 1 - Prob. 13RQCh. 1 - Prob. 14RQCh. 1 - Prob. 15RQCh. 1 - Prob. 16RQCh. 1 - Prob. 17RQCh. 1 - What is meant by the term non-value-added costs?Ch. 1 - Managerial accounting is an important part of any...Ch. 1 - Can managerial accounting play an important role...Ch. 1 - Prob. 21RQCh. 1 - Prob. 22RQCh. 1 - Name several activities in the value chain of (a)...Ch. 1 - Define the term strategic cost management.Ch. 1 - Give an example of managerial accounting...Ch. 1 - For each of the following activities, explain...Ch. 1 - Dave Nelson recently retired at age 48, courtesy...Ch. 1 - Susan Lopez, a consultant with Deloitte Young,...Ch. 1 - Prob. 31PCh. 1 - Urban Elite Apparel designs womens apparel and...Ch. 1 - Prob. 33C
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
- Costco is the largest chain of membership warehouse clubs in the world, based on sales volume, and it is the fifth largest general retailer in the United States. Costco focuses on selling products at low prices, often at a very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Costco became the first company to grow from zero to 3 billion in sales in less than six years. In a recent fiscal year, Costcos sales totaled 116 billion, a 2 percent increase from 2015, and its net income reached 2.35 billion, an 1 percent decrease from 2015. This information, and much more, can be derived from the financial statements that merchandising firms such as Costco prepare on a regular basis to provide shareholders and other interested parties information about the companys activities and financial performance. 1. What type of information would a classified income statement provide to shareholders and other interested parties? 2. What type of information would a classified balance sheet provide to shareholders and other interested parties? Why would this information be important for calculating the working capital and the current ratio, for example?arrow_forwardCostco is the largest chain of membership warehouse clubs in the world based on sales volume, and it is the fifth largest general retailer in the United States. Costco focuses on selling products at low prices, often at a very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Costco became the first company to grow from zero to 3 billion in sales in less than six years. In a recent fiscal year, Costcos sales totaled 76.3 billion, a 29.3 percent increase from 2006, and its net income reached 1.30 billion, an 18.1 percent increase from 2006. This information, and much more, can be derived from the financial statements that merchandising firms such as Costco prepare on a regular basis to provide shareholders and other interested parties information about the companys activities and financial performance. 1. What type of information would a classified income statement provide to shareholders and other interested parties? 2. What type of information would a classified balance sheet provide to shareholders and other interested parties? Why would this information be important for calculating the working capital and the current ratio, for example?arrow_forwardSaturn Computer is considering to expand, but before that, the management wants to know the financial position of the company compared to that of the industry. Data for Saturn Computer Co. and its industry averages follow. Items Amount ($) Items Amounts ($) Cash 87,500 Accounts Payable 110,000 Total Operating Expense 123,000 Interest Expense 26,500 Income Tax 18,200 Total Sales 1,607,500 Net Fixed Assets 292,500 Long-term Bank Loan 246,500 Cost of Goods Sold 1,352,500 Common Stock Equity 361,000 Inventories 211,500 Other Current Liabilities 84,000 Accounts Receivables 336,000 Notes Payable (Maturity within 1 year) 107,000 Total Operating Profit 110,000 Net Profit after tax 88,300…arrow_forward
- In 2014, Apple reported profits of more than $50 billion on salesof $182 billion. For that same period, Microsoft posted a profitof almost $30 billion on sales of $88 billion. So Apple is a bettermarketer, right? Sales and profits provide information to compare the profitability of these two competitors, but between thesenumbers is information regarding the efficiency of marketingefforts in creating those sales and profits. Answer the questions using the following information from the two companies’ incomes statements (all numbers are in thousands): Apple MicrosoftSales $182,795,000 $86,833,000Gross Profit $70,537,000 $59,899,000Marketing Expenses $8,994,750 $15,474,000Net Income (Profit) $52,503,000 $27,759,000 Calculate profit margin, net marketing contribution,marketing return on sales (or…arrow_forwardParmalat is one of the leading firms in in the long-life milks, yogurt, and juices market. The company became the world's seventh-largest supplier of diary products. In 2002, the company reported 7.6 billion euros in annual sales. Parmalat's failure is expected to have a stimulative effect on corporate governance reform. Parmalat Finanziaria S.P.A misrepresented its financial statements by billions of dollars. The company's founder and former CEO, Tanzi, now stands accused of market rigging, false auditing, and misleading investors. Tanzi established a series of overseas companies to transfer money among and to conceal liabilities. Parmalat defaulted on a 150 million euros (U.S. $184 million) payment to bondholders. Calisto Tanzi admitted to having falsified Parmalat's accounts for over a decade and to having stolen at least $600 million from the publicly traded company. The fraud was perpetrated by, among others, CFO Fausto Tonna, who produced fake documents to falsify the existence…arrow_forwardIn its recent annual report and related Corporate Responsibility Report, Hyatt provides information on company performance on several dimensions. Indicate whether the following items below best fit into the financial (label your answer “Profit”), social (label your answer “People”), or environmental (label your answer “Planet”) aspects of triple bottom line reporting. 1. Sales revenue totaled $4.4 billion. 2. Increased women in management positions. 3. Invested in career programs in Brazil. 4. Operating cash flows totaled $489 million. 5. Earned awards for best LGBT workplace. 6. Nearly all hotels recycle at least one waste stream.arrow_forward
- The Home Depot is a leading specialty retailer of hardware and home improvement products and is the second-largest retail store chain in the United States. It operates large warehouse-style stores. Despite declining sales and difficult economic conditions in 20X1 and 20X2, The Home Depot continued to invest in new stores. The following table provides summary hypothetical data for The Home Depot. REQUIRED a. Use the preceding data for The Home Depot to compute average revenues per store, capital spending per new store, and ending inventory per store in 20X2. b. Assume that The Home Depot will add 100 new stores by the end of Year +1. Use the data from 20X2 to project Year +1 sales revenues, capital spending, and ending inventory. Assume that each new store will be open for business for an average of one-half year in Year +1. For simplicity, assume that in Year +1, Home Depots sales revenues will grow, but only because it will open new stores.arrow_forwardRangoon Corp's sales last year were $400,000, and its year-end total assets were $300,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.5. The new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average?arrow_forwardJude Corp. has annual sales of P50,735,000, an average inventory level of P15,012,000, and average accounts receivable of P10,008,000. The firm's cost of goods sold is 85% of sales. The company makes all purchases on credit and has always paid on the 30th day. However, it now plans to take full advantage of trade credit and to pay its suppliers on the 40th day. The CFO also believes that sales can be maintained at the existing level but inventory can be lowered by P1,946,000 and accounts receivable by P1,946,000. What will be the net change in the cash conversion cycle, assuming a 365-day year?-32.8 days-29.5 days-26.6 days-40.5 days-36.4 daysarrow_forward
- Pnb is a major company in the market for long-life milks, yoghurts, and juices. The firm rose to become the seventh-largest provider of dairy goods in the world. The corporation had yearly revenues of 7.6 billion euros in 2002. The failure of Parmalat is likely to have a positive impact on corporate governance reform. Parmalat Finanziaria S.P.A. omitted billions of dollars from its financial accounts. The company's founder and former CEO, Tanzi, now stands accused of market rigging, false auditing, and misleading investors. Tanzi established a series of overseas companies to transfer money among and to conceal liabilities. Parmalat defaulted on a 150 million euros (U.S. $184 million) payment to bondholders. Calisto Tanzi admitted to having falsified Parmalat's accounts for over a decade and to having stolen at least $600 million from the publicly traded company. The fraud was perpetrated by, among others,…arrow_forwardEarleton Manufacturing Company has $2 billion in sales and $700,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest cent. $ fill in the blank 2 What is Earleton's target fixed assets/sales ratio? Round your answer to two decimal places. fill in the blank 3% If Earleton's sales increase 35%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Write out your answer completely. Do not round intermediate calculations. Round your answer to the nearest dollar. $ fill in the blank 4arrow_forwardThe Board of Directors were worried over the dwindling financial performance and precarious financial position of the Company. The company products were ageing; the economic depression biting harder as a result of the fluctuating exchange rate due to Brexit. The Company imports 60% of the goods sold in Garden City. The fluctuating exchange rate had affected the company’s importation. Consequently, the revenue of the Company dropped significantly. You are required to: A) Calculate the following ratios for the year ended September 30, 2015 and 2016 in Columnar form: i)Return on Capital employed ii) Total assets turnover iii)Quick Ratio iv) Debt Equity Ratio v)Fixed interest cover vi)Earnings Yeld vii) Price Earnings Ratio Viii) Dividend Yieldarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781305084087Author:Cathy J. ScottPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781305084087
Author:Cathy J. Scott
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License