FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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A company with
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Working:
Current ratio = Current Assets / Current liability
2 = Current Assets / Current liability
Current Assets = 2 x Current liability
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- In the following scenario you are the CEO of a corporation (please answer A, B & C) Your company consists of 500 employees and recorded a net profit in 2021 of $9M. You notice your call center (75 employees) seems to be taking up a substantial amount of expense, as it accounted for $3M. You have the option to outsource the call center, costing the 75 employee's their jobs, but saving you $2.5M a year in expense. What do you do; keep the 75 employees at the current salary or outsource the department to save $2.5M annually? Why did you pick what you did? Same question as above, except your 2021 net profit was $1M. Do you outsource to shed $2.5M in expense? Why or why not? Were your answers to A & B the same or different? Did your answers contradict which group you picked in your initial post?arrow_forwardA company has an EBIT of 0.5 million dollars. The fixed obligation is $300,000. What is the margin of safety in percentage? If the answer is 80%, just write down 80, not 0.8 nor 1.8!arrow_forwardAssume that the current ratio for Arch Company is 3.5, its acid-test ratio is 2.0, and its working capital is $360,000. Answer each of the following questions independently, always referring to the original information. Required: If the firm pays an account payable of $53,000, what will its new current ratio and working capital be? Note: Do not round intermediate calculations. Round "Current ratio" to 1 decimal place. If the firm sells inventory that was purchased for $50,000 at a cash price of $64,000, what will its new acid-test ratio be? Note: Do not round intermediate calculations. Round your answer to 1 decimal place.arrow_forward
- Armstrong Industries had the following operating results for 2021: Sales = $35,000; Cost of goods sold = $24,000; Depreciation expense = $6,000; Interest expense = $2,700; Dividends paid = $2000. At the beginning of the year, net fixed assets were $20,000, current assets were $7,000, and current liabilities were $4,000. At the end of the year, net fixed assets were $21,500, current assets were $8,700, and current liabilities were $4,700. The tax rate for 2021 was 21 percent. What is Armstrong's 2021 Cash Flow from Assets (CFFA)? 2000 2021 Sales $35000 COGS $24000 Depreciation $6000 Interest Expense $2700 Dividends Paid $2000 Net Fixed Assets $20000 $21500 Current Assets $7000 $8700 Current Liabilities $4000 $4700 Tax Rate 21% 21% Group of answer choices $483 $3,017 $2,017 $1,817 $7,334 $1,000 $7,500 $10,517arrow_forwardA company with working capital of $840,000 and a current ratio of 4 pays a $135,000 short-term liability. The amount of working capital immediately after payment is:arrow_forwardA company with working capital of $940,000 and a current ratio of 2 pays a $144,000 short-term liability. The amount of working capital immediately after payment is Oa. a. $796,000 Ob. $1,084,000 Oc. $940,000 Od. $144,000arrow_forward
- Crane Company has sales of $1,594,000 for the first quarter of 2022. In making the sales, the company incurred the following costs and expenses. Product costs Selling expenses $513,000 113,000 Administrative expenses 93,000 Variable Net Income $ Fixed $563,000 88,000 80,000 Calculate the company's net income under CVP for 2022.arrow_forwardA company with working capital of $900,000 and a current ratio of 4 pays a $140,000 short-term liability. The amount of working capital immediately after payment isarrow_forwardTRUE or FALSE 1. If an equipment costing P93,000 is bought by paying P30,000 as a downpayment and the remaining P63,000 in 30 days, the owner's equity or capital is increased by P93,000. 2. If an equipment is bought by paying P20,000 as a down payment and the remaining P40,000 in 30 days, total liabilities are increased by P20,000.arrow_forward
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