Question

The primary purpose of managerial accounting is to provide information useful for management decisions. Many of the managerial accounting techniques that you learn in this course will be useful for decisions you make in your everyday life. After you graduate, one of the next important decisions you'll have to make is where to work. Instructions Suppose that you go for job interviews and are given an offer of employment by two competing firms for the same entry-level position. They are offering the same salary and benefits. Their offices are in different cities. They are both public companies, so their annual reports containing financial and other information are available to you for free on their websites. For each of the following factors, provide an example of the numerical information you would need to help decide which firm to work for. (a)   Which company is currently more profitable (b)   Which city is more economical to live in (c)   Which company has better long-term prospects (d)   Which company might have more opportunities for advancement.

Answer 1

(a)   Which company is currently more profitable -

We would be considering the Gross Profit, Gross Profit Margin Ratio, Net Profit, Net Profit Margin Ration, Earning per stock etc.

(b)   Which city is more economical to live in -

We would be looking at data such as Consumer Price Index, Inflation Data etc.

(c)   Which company has better long-term prospects-

We would be looking at Investing Cash Flows, Investment in Future Projects etc.

(d)   Which company might have more opportunities for advancement -

We would be considering Industrial Data, Growth Rates, Margin Ratios etc.