Question
ABC companys records included the following, assume 365 days in a year: Accounts Receivable, 12/31/20 $ 860,000 Accounts Receivable, 12/31/19 780,000 Merchandise Inventory, 12/31/20 900,000
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ABC companys records included the following, assume 365 days in a year:
Accounts Receivable, 12/31/20 $ 860,000
Accounts Receivable, 12/31/19 780,000
Merchandise Inventory, 12/31/20 900,000
Merchandise Inventory, 12/31/19 800,000
Net Sales during 2020 8,364,000
Cost of Sales during 2020 5,950,000
Evaluate the liquidity of accounts receivable and inventory
The higher the turnovers and markup the better. With more rapid sales, the less markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
The lower the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
The higher the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
The higher the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
ABC companys records included the following, assume 365 days in a year:
Accounts Receivable, 12/31/20 $ 860,000
Accounts Receivable, 12/31/19 780,000
Merchandise Inventory, 12/31/20 900,000
Merchandise Inventory, 12/31/19 800,000
Net Sales during 2020 8,364,000
Cost of Sales during 2020 5,950,000
Evaluate the liquidity of accounts receivable and inventory
| The higher the turnovers and markup the better. With more rapid sales, the less markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability). | ||
| The lower the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability). | ||
| The higher the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be less helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
| ||
| The higher the turnovers and markup the better. With more rapid sales, the more markup is realized and collected (liquidity). It would be helpful to know the turnover ratios for 2019 and 2018 (consistency), to see how the current year compares, also how it compares to other companies within the same industries and industry averages (comparability).
|
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Business Statistics A Decision Making Approach
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry
9th Edition
013302184X, 978-0133021844
