Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter IE, Problem 18IE
1a.
To determine
The difference between the current assets and current liabilities of the company is represented by
Working capital
2a.
To determine
The relationship between net credit sales and average accounts receivable balance is established by accounts receivable turnover. It assesses how effectively a company collects revenue or uses its assets.
Accounts receivable turnover
3a.
To determine
Times interest earned ratio indicates how many times the interest charges are covered by the profits available to pay interest charges. A high times interest earned ratio usually indicates that a company is performing well and is less risky, and vice versa.
Time interest earned ratio
4a.
To determine
The relationship between net income and net sales is established by the net profit margin ratio. It displays the net income earned as a percentage of net sales. Investors can use the net profit margin ratio to compare the performance of the company among competitors.
Net profit margin percentage
5.
To determine
Ratio analysis is a tool for determining the relationship between various items. It is used to assess a company's financial performance using values from the income statement, balance sheet, statement of cash flows, and so on.
The preference of the management.
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Homework: Cost Management and Allocation Assignment
Question 7- Homework: Cost Management and Allocation Assignment- Connect
Homework: Cost Management and Allocation Assignm... i
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State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments
(Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the
year ended December 31 follows.
4.
points
Administration Communications
Facilities
Deposits
$8,320,000 $4,600,000
447, 000
Loans
Direct costs
$200,000
24,000
$290,000
31,000
$253,000
20,500
Employee hours
Number of employees
Square footage occupied
Skipped
360,000
8.
14
6.
230
130
4,600
13,800
5,100
244, 100
203,300
The costs of the service departments are allocated on the following bases: Administration, employee-hours; Communications, number
of employees; and Facilities, square…
PD FINANCIAL MANAGEMENT 1.pd x
O File | C:/Users/Montero%20Fam/OneDrive%20-%20Concierge%20Test%20Lab/Desktop/2nd%20year%20prelim/FINANCIAL%20MANAGEMENT%201%20.pdf
of 52
D Page view
A Read aloud
V Draw
E Highlight
24
Erase
Problem 2 (Common-Size Income Statement)
A comparative income statement is given below for Rainbow Company
Rainbow Company
Comparative Income Statement
For the Years Ended June 30, 2019, and 2018
2019
2018
Sales
5,000,000.00
4,000,000.00
Less: Cost of Goods Sold
3,160,000.00
2,400,000.00
Gross Margin
1,840,000.00
P
1,600,000.00
Selling Expenses
900,000.00
700,000.00
Administrative Expenses
680,000.00
584,000.00
Total Expenses
1,580,000.00
1,284,000.00
Net Operating Income
260,000.00
P
316,000.00
Interest Expense
70,000.00
40,000.00
Net Income Before Taxes
P
190,000.00
P
276,000.00
The president is concerned that net income is down in 2019 even though sales have increased
during the year. The president is also concerned that administrative expenses have increased,…
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