GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Chapter 5, Problem 2MCQ
To determine
Identify the component that would boost the company’s ROA in profit driver analysis, if a company plans to differentiate its products by offering low prices and discounts for items packaged in bulk (like a discount retailer that requires memberships for its customers).
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Does a low return on sales indicate a weak company? (Y/N). Explain your answer.
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A. A company with a current ratio of 0.5, should purchase additional inventory on credit if it wants to improve this ratio.
B. Return on assets is a function of two variables, the profit margin and current asset turnover.
C. A company with a current ratio of 0. 5, should sell some of the existing inventory at cost if it wants to improve this ratio.
D. Firms with low rates of return on stockholders’ equity tend to sell at relatively high ratios of market price to book value.
1. Calculate the net profit increase or (decrease) from accepting the special order.
2. Assume that present sales will not be affected. Should the order be accepted from a financial point of view (i.e., is it profitable)?
Chapter 5 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Explain what a material amount is.Ch. 5 - What basis of accounting (cash or accrual) does...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - For property, plant, and equipment, as reported on...
Ch. 5 - Briefly explain the major classifications of...Ch. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 14QCh. 5 - If average total assets increase, but net income,...Ch. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - Prob. 8MCQCh. 5 - Prob. 9MCQCh. 5 - Prob. 10MCQCh. 5 - Prob. 5.1MECh. 5 - Prob. 5.2MECh. 5 - Prob. 5.3MECh. 5 - Prob. 5.4MECh. 5 - Determining Financial Statement Effects of Sales...Ch. 5 - Prob. 5.6MECh. 5 - Prob. 5.7MECh. 5 - Matching Players in the Accounting Communication...Ch. 5 - Prob. 5.2ECh. 5 - Finding Financial Information: Matching...Ch. 5 - Prob. 5.4ECh. 5 - Preparing a Classified Balance Sheet Campbell Soup...Ch. 5 - Prob. 5.6ECh. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Stock Issuances and the Statement of Stockholders...Ch. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Matching Transactions with Concepts Following are...Ch. 5 - Matching Definitions with Balance Sheet-Related...Ch. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.6PCh. 5 - Determining and Interpreting the Effects of...Ch. 5 - Determining the Effects of Transactions on Ratios...Ch. 5 - Prob. 5.9PCh. 5 - Prob. 5.1APCh. 5 - Preparing a Statement of Stockholders' Equity...Ch. 5 - Prob. 5.3APCh. 5 - Prob. 5.4APCh. 5 - Evaluating the Impact of Transactions on Statement...Ch. 5 - Prob. 5.2CONCh. 5 - Finding Financial Information Refer to the...Ch. 5 - Finding Financial Information Refer to the...Ch. 5 - Prob. 5.3CPCh. 5 - Prob. 5.4CPCh. 5 - Prob. 5.5CPCh. 5 - Prob. 5.6CPCh. 5 - Prob. 5.7CP
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- Which of the following is not one of the benefits of breakeven analysis to businesses?A. Determining the lowest selling priceB. Choosing the most profitable product typesC. Determination of firm valueD. Differentiation of fixed variable expensesE. Conducting decline in sales analysisarrow_forwardMULTIPLE CHOICE. Answer the following: 1.It show how efficient the business is as to its purchase or use of inventory for the whole operation. a. Operating Income b. Inventory Liquidation Ratio c. Inventory Turnover d. Operating Efficiency 2. This shows that the original investment made by the owner will be recovered. a. Payback Period b. Return on Investment c. Asset Test Ratio d. Capital Turnover Ratio 3. If the company wants to see the ratio of income generation of the business, what formula will they use for its computation? a. Total Projected Cost / Average Annual Cash Inflow b. (Net Income/Cost of Investment) x 100 c. (Net Profit/Net Sales) X 100 d. Cost of Goods Sold/ Average Inventory 4. If the cost of goods sold year 2023 is P60,000, net sales is P60,000 and average inventory is 20,000, what is the inventory turn-over? a. 6 times b. 3 times c.2 times d. 2.5 timesarrow_forwardFor CVP analysis calculations, which of the following statements is correct? A. In target profit calculations, sales revenue is less than total costs. B. CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit. OC. A company's sales mix is ultimately determined by the management of a company. D. The Break-even point is the point at which operating income is greater than $0. O E. If sales volume is expected to be higher than the indifference point, management should choose the cost structure with the higher fixed costs.arrow_forward
- 6. What will be the impact on a company's profit if sales mix shifts between low margin and high margin products? Explain different possible scenarios.arrow_forwardNet profit margin is a key measure of profitability that relates the net profits of a firm to its sales. Group of answer choices. True Falsearrow_forwardWhich of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratioarrow_forward
- Explain why rewarding sales personnel on the basis of total sales might not be in the best interests of a business whose goal is to maximize profits.arrow_forwardIf the standalone selling price of a good or service is not readily observable, what approaches might a company use to obtain an estimate of the stand-alone selling price?arrow_forwardWhich of the following is not included in the Dupont framework? a. a measure of profitability c. a measure of leverage b. a measure of efficiency d. a measure of market sharearrow_forward
- How does the goal of the firm influence the sales maximization and profit maximization decision.arrow_forwardThe business risk of a company is most accurately measured by the company's: a. Debt-to-equity ratio b. Efficiency in using assets to generate sales c. Operating leverage and level of uncertainly about demand output prices and competitionarrow_forwardWhich of the following change in regulations is most likely to improve internal market efficiency and thereby overall market efficiency? Reducing margin requirements on short selling. Raising margin requirements on short selling. Raising margin requirements on margin purchases. Reducing trading hours. Increasing margin interest rates.arrow_forward
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