Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 2Q
Summary Introduction
To choose: The items which rises spontaneously with rises in sales.
Expert Solution & Answer
Explanation of Solution
Accrued wages, accounts payable and accrued taxes rise spontaneously.
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
Some liability and net worth items increase spontaneously with increases insales. Put a check (✓) by the following listed items that typically increasespontaneously:Notes payable to banks______________________
An investor wants to know if a company is manipulating its earnings with the help of allowances for doubtful accounts? What is the best way to do this?
A.Look at the level of doubtful accounts as a percentage of sales and percentage of receivables for past years.
b.Compare the level of doubtful accounts as a percentage of sales and percentage of receivables with peers in the same industry.
c.Analyze the earnings trends without allowances for doubtful allowances and identify earnings pressures if any.
d.All of these.
Which one of the following is an advantage of LIFO?
a. In periods of rising prices, less income taxes are paid
b. In periods of rising prices, more holding gains are reported in net income
c. Record keeping and financial statement preparation are easier
d. Conservative income statement and balance sheet disclousures result from falling prices
Chapter 12 Solutions
Financial Management: Theory & Practice
Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - What is meant by the term “self-supporting growth...Ch. 12 - Suppose a firm makes the following policy changes...Ch. 12 - Broussard Skateboard’s sales are expected to...Ch. 12 - Berman & Jaccor Corporation’s current sales and...Ch. 12 - Smiley Corporations current sales and partial...Ch. 12 - Maggie’s Muffins Bakery generated $5 million in...Ch. 12 - At year-end 2019, Wallace Landscapings total...
Ch. 12 - The Booth Company’s sales are forecasted to double...Ch. 12 - Upton Computers makes bulk purchases of small...Ch. 12 - Stevens Textile Corporations 2019 financial...Ch. 12 - Hatfield Medical Supplys stock price had been...Ch. 12 - Use the AFN equation to estimate Hatfield’s...Ch. 12 - Prob. 3MC
Knowledge Booster
Similar questions
- Which of the following is a positive sign that a company can quickly turn its receivables into cash? a. A low receivables turnover ratio.b. A high receivables turnover ratio.c. A low average collection period.d. Both a high receivables turnover ratio and a low average collection period.arrow_forwardA change in credit policy has caused an increase in sales, an increase in discounts taken, a reduction in the investment in accounts receivable, and a reduction in the number of doubtful accounts. Based upon this information, we know that a)Net income has increased b)The average collection period has decreased. c)Gross profit has declines d)The size of of the discount offered has increasedarrow_forwardMaking changes to a firm’s credit policy involves trade-offs. Assuming that all other factors remain constant, which of the following are outcomes expected to result from an increase in a firm’s cash discount? Check all that apply. An increase in the cost of the discounts given An increase in the firm’s bad-debt expenses An increase in the firm’s credit sales, a speeding up of customer payments, and a reduction in the firm’s receivables investment An increase in the creditworthiness of the firm’s customersarrow_forward
- Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) An increase in the percentage of doubtful collections. B) An increase in collection expenses. C) Decrease in units sold D) Increase in the turnover of accounts receivable.arrow_forwardQuestion Which of the following changes in credit standards and conditions would cause an improvement in profit? A) Increase in the turnover of accounts receivable B) Decrease in units sold C) Increase in collection expenses D) An increase in the percentage of doubtful accounts receivable.arrow_forwardWhich of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditorsarrow_forward
- Which of the following statements are false? Select all that apply a. Liquidity ratios are used to measure the speed with which various accounts are converted into sales. b. When ratios of different years are being compared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes called return on investment d. Generally, inventory is concerned with the most liquid asset that a firm possesses. e. A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.arrow_forwardwhich one is correct please confirm? QUESTION 7 In using the percentage of sales forecasting method, the assumption is that ______________. a. there is a direct relationship between notes payable and sales b. accounts payable will not increase proportionally with sales c. there is a direct relationship between long-term debt and sales d. inventories will increase proportionately with salesarrow_forwardQuestions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do greater Net sales always result in greater net income? (Y/N) Why? Examine the financial information above and comment on the item that you find interesting.arrow_forward
- Which of the following is correct with regards to cash discounts offering? a. It is used lengthen the cash conversion cycle without putting pressure the clients b. Investment in accounts receivable will likely grow since more customers will pay on a later date c. Bad debts expense will probably decrease since customers more likely take the advantage of discounts d. These are granted because customer acquires high quantity of products and goodsarrow_forwardA. What is the incremental cash flows from switching credit policies? B. What is the cost of switching? C. What is your recommendation? D. What is the break-even sales increase? Interpret.arrow_forwardthe margin of safety is the reduction in sales that can occur before the break-even point is reached. It measures the cushion that a particular level of sales can decline without incurring a loss. Discuss two limitations of relying on a margin of safety when predicting future sales. Is it reliable? Why or why not? Provide support for rationale.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College