Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) Company had balance sheet and income statement information for 2003 which are as follows:

 

Balance Sheet
Cash $20
A/R 1,000
Inventories 5,000
Total C.A. $6,020 Debt 4,000
Net F.A. 2,980 Equity 5,000
Total Assets $9,000 Total Claims $9,000

 

 

Income Statement
Sales $10,000
Cost of Goods Sold $9,200
EBIT $800
Interest (10%) $400
EBT $400
Taxes (40%) $160
Net Income $240

 

Industry average inventory turnover is 5. You think you can change the inventory control system so as to cause your turnover to equal industry average, and this change is expected to have no effect on either sales or cost of goods sold. Cash generated from decreasing inventories will be used to purchase tax-exempt securities which have a? percent rate of return. Determine the profit margin be after the change in inventories reflected in income statement?

a. 2.1%
b. 2.4%
c. 4.5%
d. 5.3%
e. 6.7%

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922154

Have any Question? 


Related Questions in Accounting Basics

Managerial accounting assignment task- group report

Managerial Accounting Assignment Task- Group Report: "Measuring Performance and Management Control Systems" - A study of Performance Measurement in Australian Public Companies. Outcomes- a) Analyse the roles of cost and ...

What is represented by the labeled lines connecting

What is represented by the labeled lines connecting entities in an REA diagram? Why are journals and ledgers not modeled in an REA diagram?

Provide a short conclusion on the calculations of variances

Provide a short conclusion on the calculations of variances in a cash budget.

Locate and read the article listed below and answer the

Locate and read the article listed below and answer the following questions. Brandon, D. M. November 2010. External Auditor Evaluations of Outsourced Internal Auditors. Auditing: A Journal of Practice & Theory 29 (2): 15 ...

Changes in accounting principles and changes in accounting

"Changes in Accounting Principles and Changes in Accounting Estimates" Please respond to the following: • From the e-Activity, discuss the accounting principles that the identified company changed, and explain the major ...

1 do you believe economic principles like competition apply

1. Do you believe economic principles like competition apply in both private and public organizations? 2. Are there other public functions that might benefit from more competition, including competition from private firm ...

Read the following scenariothomas perdue had built up a

Read the following scenario: Thomas Perdue had built up a successful development company. When he became city commissioner, everyone said it was good to have a businessperson on the commission. They said businesspeople k ...

The assignmentmost of our cases will involve some form of

The Assignment: Most of our cases will involve some form of role-playing. In other words, they won't be student-to-teacher case write-ups. In this case I am also playing a role. I am Chairman of ABC-VC, a venture capital ...

I need help with a t-chart account with the following1

I need help with a T-Chart Account with the following: 1. Received $10,000 contribution from Bill London, owner, in exchange for capital. 2. Paid utilities expense of $400. 3. Paid the liability from July 5 (Purchased eq ...

Bull what three transaction cycles exist in all

• What three transaction cycles exist in all businesses? • Name the major subsystems of the expenditure cycle. • Identify and distinguish between the physical and financial components of the expenditure cycle. • Name the ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate