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A relatively low sales to working capital ratio is a tentative indication of an efficient use of working capital.
List three situations in which the liquidity position of the firm may not be as good as that indicated by the liquidity ratios.
Why does LIFO result in a very unrealistic ending inventory figure in a period of rising prices?
P. Gibson Company has computed its accounts receivable turnover per year to be 12.
Gibson Company has net sales of $3,500,000 and average gross receivables of $324,000.
Is J. Shaffer Company's days' sales in inventory as computed realistic in comparison with the actual days' sales in inventory?
Szabo Company had an average inventory of $280,000 and a cost of goods sold of $1,250,000.
Should replacement cost of inventory and cost of goods sold be used, when possible, when computing days' sales in inventory? Discuss
Evaluate the results of your computations in regard to the short-term liquidity of the firm.
The gross receivables balance at April 30, 2010, was $75,000, and the inventory balance was $350,000 on this date.
Comment on the sales to working capital ratio for J.A. Appliance in relation to the industry average and what this may indicate.
Will the substitution of the note receivable for the account receivable improve the liquidity of Marvick Enterprises?
How much taxes will need to be paid on past earnings from the switch from LIFO? How will the switch from LIFO influence taxes in the future?
What are extraordinary items? How are they shown on the income statement? Why are they shown in that manner?
Why is the equity in earnings of nonconsolidated subsidiaries sometimes a problem in profitability analysis? Discuss with respect to income versus cash flow.
A health food distributor selling wholesale dairy products and vitamins decides to discontinue the division that sells vitamins.
How does the declaration of a cash dividend affect the financial statements? How does the payment of a cash dividend affect the financial statements?
Explain the relationship between the income statement and the reconciliation of retained earnings.
An income statement is a summary of revenues and expenses and gains and losses, ending with net income for a specific period of time.
Estimate the tax rate for unusual write-offs based on the taxes on operating income.
Compute earnings per share before extraordinary items and net earnings.
What earnings relate to minority shareholders of a subsidiary that was consolidated?
At the end of 2012, vandals destroyed your financial records. Fortunately, the controller had kept certain statistical data related to the income statement.
The corporation disposed of its consumer products division in August 2012, at a loss of $90,000 pretax.
List the statement on which each of the following items may appear. Choose from income statement, balance sheet, or neither.