Question

In: Accounting

Which of the following would indicate that the firm may be carrying excess inventory? A rise...

Which of the following would indicate that the firm may be carrying excess inventory?

A rise in total asset turnover

A decline in the current ratio

A decline in days’ sales in inventory

A decline in sales

A stable current ratio with a declining quick ratio

2. The following data are taken from the sheet at the end of the current year:

Cash 525,000

Trading Investments 106,000

Accrued Liabilities 515,000

Notes Payable, long-term 90,000

Prepaid Insurance 95,000

Accounts Payable 348,000

Inventory 1,459,000

Accounts Receivable 89,000

Salaries Payable 105,000

Intangible Assets 500,000

Property, Plant and Equipment 1,000,000

Computation Interpretation—what does the result mean?

Compute: a. Working capital: ___________________ __________________________________

b. Current ratio: ___________________ __________________________________

c. Acid-test ratio: ___________________ __________________________________

d. Consider the additional information for the above analysis:

Current ratio, prior year: 1.8

Industry average: 2.1

Interpret your findings: Are the results acceptable?

Accy 306 Quiz #6, page 2 of 2

The Hershey Company presents the following data for December 31, 2016.


Inventories, beginning of year	$ 750,970
Inventories, end of year	745,678
Cost of Goods Sold	4,282,290
Net Sales	7,440,181

______6. The inventory turnover in days (use average inventory) is:

a. 29.0

b. 63.6

c. 36.6

d. 64.1

e. 63.8

______7. The prior and current year results for Days’ Sales in Inventory are:

Using information above: Complete 2016

	2016	2015	2014
Days’ Sales in Inventory		70.74	65.24

T or F: This trend indicates the company is improving its efficiency and effectiveness in managing inventory.

______8. If merchandise inventory is being valued at cost and the price level is consistently rising (inflation), which method of costing will yield the largest gross profit and higher current ratio?

a. Average cost

b. FIDO

c. FIFO

d. LIFO

e. Specific identification

_____9. Which of the following types of businesses would normally have the shortest operating cycle?

a. Retail clothing store

b. Grocery store

c. Wholesale furniture store

d. Car manufacturer

e. Car dealer

_____10. General Motors presents the following data for the year ended December 31, 2017 (millions).


Receivables, net (allowance = $212M), beginning of year Receivables, net (allowance = $278M), end of year		$ 8,700 8,164
Net Sales		133,449
Cost of Goods Sold		114,869

The days’ sales in receivables using 365 days is:

a. 22.3

b. 15.8

c. 26.8

d. 23.1

e. 22.7

Expert Solution

ekkarill92 answered 1 year ago

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