Ruby Company sold inventory on credit. Its gross profit percentage is 23 per cent. The effect...
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Ruby Company sold inventory on credit. Its gross profit percentage is 23 per cent. The effect of this transaction is that the:
debt-to-equity ratio increased
current ratio was unchanged
working capital increased
earnings per share decreased
Homework Answers
Answer
- The correct answer is Option #3: Working Capital will increase.
- This is because, Working Capital = Current Assets – Current Liabilities
- When inventory at sold with a GP of 23% on account, it will have following effects:
--Inventory (a
current asset) will decrease by
the cost of inventory sold, and
--Accounts
receivables (also a current asset) will
increase
by the cost + 23% GP.
--Hence, for current assets, Increase will be greater than
decrease. Hence the Current Asset will enjoy a ‘net increase’
--Current Liabilities will not be affected.
--Since Current Assets will increase, while Current Liabilities
will remain same, the Working capital will INCREASE, because
working capital = Current Assets – Current Liabilities.
Add Answer to:
Ruby Company sold inventory on credit. Its gross profit
percentage is 23 per cent. The effect...
Requirements: A. Gross Margin Percentage B. Earnings Per Share C. Price-earnings Ratio D. Dividend Payout Ratio...
Requirements:
A. Gross
Margin Percentage
B. Earnings
Per Share
C.
Price-earnings Ratio
D. Dividend
Payout Ratio
E. Dividend
Yield Ratio
F. Return
on Total Assets
G. Return
on Equity
H. Book
Value per share
I. Working
Capital
J. Current
Ratio
K.
Acid-test Ratio
L.
Accounts receivables turnover
M.
Average Collection Period
N.
Inventory turnover
O. Average
Sale Period
P.
Times-Interest Earned
Q.
Debt-to-Equity Ratio
Please Show A step-by-step Solutions; (Only for Genius)
Thank you soooooo much.
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Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 140-141 of the course...
Prepare a performance report
on Barry Computer Company. (Problem 4-23 on pages 140-141 of the
course text provides a balance sheet and an income statement for
the company.)
Prepare your performance report
to show calculations for the 14 ratios listed on page 141, as well
as a comparison of your computed ratios with the listed industry
averages.
Write a short memo to your
supervisor explaining your findings and your recommendations for
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Suggest some ways in which the
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Requirements:
A. Gross
Margin Percentage
B. Earnings
Per Share
C.
Price-earnings Ratio
D. Dividend
Payout Ratio
E. Dividend
Yield Ratio
F. Return
on Total Assets
G. Return
on Equity
H. Book
Value per share
I. Working
Capital
J. Current
Ratio
K.
Acid-test Ratio
L.
Accounts receivables turnover
M.
Average Collection Period
N.
Inventory turnover
O. Average
Sale Period
P.
Times-Interest Earned
Q.
Debt-to-Equity Ratio
Please Show A step-by-step Solutions; (Only for Genius)
Thank you soooooo much.
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Prepare a performance report
on Barry Computer Company. (Problem 4-23 on pages 140-141 of the
course text provides a balance sheet and an income statement for
the company.)
Prepare your performance report
to show calculations for the 14 ratios listed on page 141, as well
as a comparison of your computed ratios with the listed industry
averages.
Write a short memo to your
supervisor explaining your findings and your recommendations for
improvement.
Suggest some ways in which the
company can...
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