Fundamentals of Financial Accounting - With Access
5th Edition
ISBN: 9781259695858
Author: PHILLIPS
Publisher: MCG
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Chapter 13, Problem 2MC
To determine
which of the following options would not directly change the receivables turnover ratio for a company.
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Students have asked these similar questions
Which of the following statements about receivables turnover is false?
Receivables turnover measures the efficiency of the firm in managing and selling inventory
Receivables turnover measures the liquidity of the firm's receivables
Receivables turnover is calculated with revenue in the numerator
A low receivables turnover indicates efficient receivables management
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.
What does a low ratio in Creditors Turnover Ratio indicate?
a.
Company collects the money fast from Debtors
b.
It shows the speed at which the inventory will be converted into sales
c.
Company is delaying the payment to the creditors
d.
Company is making the payment to the creditors very promptly
Chapter 13 Solutions
Fundamentals of Financial Accounting - With Access
Ch. 13 - What is the general goal of trend analysis?Ch. 13 - Prob. 2QCh. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Slow Cellars current ratio increased from 1.2 to...Ch. 13 - From last year to this year, Colossal Companys...Ch. 13 - From last year to this year, Berry Bam reported...Ch. 13 - Explain whether the following situations, taken...
Ch. 13 - What are the two essential characteristics of...Ch. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - 1. Which of the following ratios is not used to...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Analysts use ratios to a. Compare different...Ch. 13 - Which of the following ratios incorporates stock...Ch. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - A bank is least likely to use which of the...Ch. 13 - Prob. 9MCCh. 13 - (Supplement 13A) Which of the following items is...Ch. 13 - Calculations for Horizontal Analyses Using the...Ch. 13 - Calculations for Vertical Analyses Refer to M13-1....Ch. 13 - Interpreting Horizontal Analyses Refer to the...Ch. 13 - Interpreting Vertical Analyses Refer to the...Ch. 13 - Prob. 13.5MECh. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Inferring Financial Information Using the Current...Ch. 13 - Prob. 13.10MECh. 13 - Identifying Relevant Ratios Identify the ratio...Ch. 13 - Prob. 13.12MECh. 13 - Analyzing the Impact of Accounting Alternatives...Ch. 13 - Describing the Effect of Accounting Decisions on...Ch. 13 - Prob. 13.1ECh. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Computing Profitability Ratios Use the information...Ch. 13 - Prob. 13.5ECh. 13 - Matching Each Ratio with Its Computational Formula...Ch. 13 - Computing and Interpreting Selected Liquidity...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.14ECh. 13 - Analyzing the Impact of Alternative Inventory...Ch. 13 - Prob. 13.1CPCh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3CPCh. 13 - Prob. 13.4CPCh. 13 - Prob. 13.5CPCh. 13 - Prob. 13.6CPCh. 13 - Prob. 13.7CPCh. 13 - Prob. 13.1PACh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3PACh. 13 - Prob. 13.4PACh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PACh. 13 - Prob. 13.1PBCh. 13 - Prob. 13.2PBCh. 13 - Prob. 13.3PBCh. 13 - Prob. 13.4PBCh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PBCh. 13 - Prob. 13.1SDCCh. 13 - Prob. 13.2SDCCh. 13 - Prob. 13.5SDCCh. 13 - Prob. 13.6SDCCh. 13 - Prob. 13.7SDCCh. 13 - Prob. 13.1CC
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- 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 customersarrow_forwardIs it true that, when one firm sells to another on credit, the seller records the transaction as an account receivable while the buyer records it as an account payable and that, disregarding discounts, the receivable typically exceeds the payable by the amount of profit on the sale?arrow_forwardWhat are some possible negative signals when the product of the accounts receivable turnover ratio is lower (i.e., fewer times)?arrow_forward
- Shimmer Products is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 5.6% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 13.7% percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 5%, 31–90 days past due at 21%, and over 90 days past due at 30%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method D. Which method should the company choose, and why?arrow_forwardOrganics Plus is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 4% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 12% of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 6%, 31–90 days past due at 19%, and over 90 days past due at 26%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method. D. Which method should the company choose, and why?arrow_forwardA high inventory turnover ratio provides evidence that a company is having problems with stockouts and disgruntled customers. Do you agree? Explain.arrow_forward
- What does a high ratio in Creditors Turnover Ratio indicate? a. Company is delaying the payment to the creditors b. Company is making the payment to the creditors very promptly c. It shows the speed at which the inventory will be converted into sales d. Company collects the money fast from Debtorsarrow_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 events will cause a company’s current ratio to decrease? a. The sale of inventory for credit (accounts receivable) b. Issuing stock for cash c. The sale of inventory for cash d. Paying off long-term debt with casharrow_forward
- 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 measuresarrow_forwardWhen a deposit on returnable containers is forfeited, the firm holding the deposit will experience: A. a decrease in cost of goods sold. B. an increase in current liabilities. C. an increase in account receivable. D. an increase in revenue.arrow_forwardWhich of the statements below is TRUE? a. Receivables turnover is accounts receivable divided by sales. b. Inventory turnover is cost of goods sold divided by accounts receivables. c. Total asset turnover is profits divided by total assets. d. A higher inventory turnover ratio signifies that inventory is moving faster.arrow_forward
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