Answer:
Explanation:
For Navy contract, the total number of man hours put into production will be:
= 27 × 40 × 2
= 2160 man hours
Then, the units produced per labor hour will be:
= 2540 devices / 2160
= 1.176 units per labor hour.
For Army contracts, the total number of man hours put into production will be:
= 37 × 40 × 3
= 4440 man hours
Then, the units produced per labor hour will be:
= 5940/4440
= 1.338 units per labor hour.
Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $30,000 Number of employees
Depreciation 20,500 Cost of goods sold
Advertising 41,500 Net sales
Item Drilling Grinding Total
Number of employees 1080 1620 2700
Net sales $326,625 $477,375 $804,000
Cost of goods sold $76,500 $127,500 $204,000
The amount of the total office expenses that should be allocated to Grinding for the current period is : ____________
Answer:
Total allocated costs= $63,221.7
Explanation:
First, we need to calculate the allocation rates based on the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Salaries= 30,000/2,700= $11.11 per number of employees
Depreciation= 20,500/204,000= $0.10 per cost of goods sold dollar
Advertising= 41,500/804,000= $0.052 per net sales dollar
Now, we can allocate costs to Grinding:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Salaries= 11.11*1,620= 17,998.2
Depreciation= 0.10*204,000= 20,400
Advertising= 0.052*477,375= 24,823.5
Total allocated costs= $63,221.7
Explain one situation when you will use these two pricing strategies penetration pricing and skimming prices
Answer:
An electronic news portal that offers one complimentary month for something like a free trial service or an institution that offers a free bank account for 6 months are both instances of penetration pricing.
A pricing technique known as price skimming is establishing a premium charge when other rivals enter the market. For instance, the Playstation 3 was initially priced at $599 in the United States, but has now been lowered to around $200.
If demand is not uniform and constant, then stockout risks can be controlled by: increasing the EOQ. spreading annual demand over more frequent, but smaller, orders. raising the selling price to reduce demand. adding safety stock. reducing the reorder point.
Answer: Adding safety stock
Explanation:
A stockout is when the orders of the customer for a particular product is more than the amount of inventory that is kept on hand and this leads to lost sales, and a negative impact on the long-term relationship with the customer.
Since the demand is not uniform and constant, then stockout risks can be controlled by adding safety stock. The safety stock is asimply the additional quantity of an item which is held in the inventory in order to help to reduce stockout risk.
The parts of the process cost summary include:______.
a. cost charged to each job.
b. costs charged to departments.
c. cost assignment and reconciliation.
d. equivalent units of production.
Answer:
b. costs charged to departments. c. cost assignment and reconciliation. d. equivalent units of productionExplanation:
In Process costing, the company involved is producing a large amount of goods and services that are exactly the same. In order to assign costs therefore, the company will assign costs to all the products instead of individually.
Costs would be charged to various departments because they produce the goods so the entire department cost has to be assigned and reconciled with with the department that produce the goods. When the company only managed to partially complete the production of a good, they will still have to assign costs and so use equivalent units of production to do so.
The Japanese economy has been experiencing slow growth. As a result the Prime Minister, who thinks John Maynard Keynes was the greatest economist ever, has decided to increase government spending. As head of the economic council the Prime Minister asks you to determine the size of the increase needed to bring the economy to full employment.
Assume there is a GDP gap of 1 billion yen and the marginal propensity to consume (MPC) is .60. What advise do you give the Prime Minister?
a. The recessionary gap is equal to 625 million yen.
b. The inflationary gap is equal to 1 billion yen divided by 2.5 or 0.4 billion yen.
c. The recessionary gap is equal to 1 billion yen divided by 2.5 or 0.4 billion yen.
d. The inflationary gap is equal to 1 billion yen divided by 1.66 or 0.625 billion yen.
Answer:
c. The recessionary gap is equal to 1 billion yen divided by 2.5 or 0.4 billion yen.
Explanation:
The computation is shown below:
The multiplier is
= 1 ÷ (1 - MPC)
= 1 ÷ (1 - 0.60)
= 2.5
Now the increase in government expenditure for closing out the recessionary gap should be
Change in income = change in government purchase × multiplier
100 = change in government purchase × 2.5
So, the change in government purchase should be
= 100 ÷2.5
= 40
Hence, the option c is correct
Begin with a single sum of money at period 0. First, calculate a future value of that sum at 12.01%. Then discount that future value back to period 0 at 11.99%. In relation to the initial single sum, the discounted future value:_________
a. Is greater than the original amount
b. Is less than the original amount
c. Is the same as the original amount
d. Cannot be determined with the information given
Answer:
A
Explanation:
Let single sum = 100
The formula for calculating future value:
FV = P (1 + r)^nm
FV = Future value
P = Present value
R = interest rate
m = number of compounding
N = number of years
Future value in year 1 = 100 x 1.1201 = 112.01
Present value = future value / (1 + r)
112.01 / 1.1199 = 100.02
The discounted future value, 100.02 , is greater than, 100, the value at the initial stage by 0.02
A _____________ strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that the customer perceives to be distinct from competitor offerings.
Answer: differentiation strategy
Explanation:
The differentiation strategy refers to the marketing strategy that is designed in order to distinguish the product and services of a company from other companies.
Product differentiation helps in the development of a strong value proposition which ensures that the product is attractive to the audience. The differentiation strategy ensures that the product is unique from others and this creates a competitive advantage.
Change Treaster in equilibrium Income Investment adultiplier =Y-S II 1-6 In au A the (ID Accure acanany Tax Increased by eas what will be the change in equilibrium Income if the slope of the saving function is 0.5 Initial equilibrium income was cu 1000 what will be the new squilibrium. & Incame after tax decrease Interprete your findings
Answer:
실례합니다? 당신은 이것을 의미합니까?
Explanation:
균형에서 Treaster의 변화 소득 투자 성체 = YS II 1-6 In au A (ID Accure acanany Tax 증가 eas만큼 균형의 변화는 얼마입니까 저축 함수의 기울기가 0.5인 경우 소득 초기 균형 소득은 cu 1000 새로운 균형이 되십시오. & 세금 감면 후 소득 조사 결과 해석 ??
During a risk brainstorming session a team member identifies a risk. This particular risk does not seem to belong to any of the categories in you Risk Breakdown Structure (RBS). How should you respond
Answer:
Record it in the risk register, discuss potential responses and make a note to update the RBS.
Explanation:
Risk management is the process by which the management of an organisation identifies, assessed, and controls threats that may affect the company's capital or earnings.
The risks can be as a result of natural disasters, management error, financial uncertainty, or accidents.
In the given instance if a risk is not on any of the categories in you Risk Breakdown Structure (RBS), there is need to record it in the risk register, discuss potential responses and make a note to update the RBS.
The Rolling Department of Oak Ridge Steel Company had 3,600 tons in beginning work in process inventory (50% complete). During July, 59,500 tons were completed. The ending work in process inventory on July 31 was 3,000 tons (40% complete).
What are the total equivalent units for direct materials for July if materials are added at the beginning of the process?
Describe two distinct reasons why someone who has never used a drug in his or her life might refuse a test at work. Convert those reasons into well-founded ethical arguments.
Answer: See explanation
Explanation:
The two main reasons why someone who has never used a drug in his or her life might refuse a test at work are provided below:
1. If there's no health related reason for the employer to perform the test.
2. When there's no reason by the employee to believe that drug use is occurring.
It should be noted that an employee can refuse a testing unless testing is mandatory for the job or when there's reasonable suspicion. In a situation where there's suspicion, then ethically, the drug test is reasonable as an employee who uses drug can be less productive than others.
Based on this argument, the privacy of the employee should be respected. For example, in a scenario whereby an employer request for a urine sample of the employee, this is an invasion of privacy. Even if the worker took the substance tbe previous night, he or she didn't take it while at work and hence, that isn't the concern of the employer.
Also, there is an argument of freedom. As individuals, we have the right to pursue our own happiness. This is a legal argument.
Coronado Industries can produce 100 units of a component part with the following costs: Direct Materials $24000 Direct Labor 8500 Variable Overhead 22000 Fixed Overhead 11000 If Coronado Industries can purchase the units externally for $60000, by what amount will its total costs change
Answer:
Increase of $5,500
Explanation:
The computation of the change in the total cost is given below:
Total cost at the time of producing is
= Direct material + direct labor + variable overhead
= $24,000 + $8,500 + $22,000
= $54,500
And, the cost of purchasing the unit is $60,000
So, there is an increase of
= $60,000 - $54,500
= $5,500
The same should be relevant
A parcel delivery company delivered 103,600 packages last year, when its average employment was 83 drivers. This year, the firm handled 112,160 deliveries with 93 drivers. What was the percentage change in productivity over the past years?
Answer: -3.38%
Explanation:
The percentage change in productivity over the past years will be calculated thus:
The Productivity will be the total packages handled divided by the number of drivers employed.
Last year Productivity will be:
= 103600/83
= 1248.19 packages per driver
This year Productivity will be:
= 112160/93
= 1206.02 packages per driver
Therefore, the percentage change in productivity = (This year Productivity - Last year Productivity) / (Last year Productivity) ×100
= [(1206.02-1248.19) / (1248.19)] × 100
= -42.17/1248.19 × 100
= -3.38%
Senior managers are responsible for making specific plans to implement the strategy. The above statement is true or false. explained
Answer:
True
Explanation:
A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.
Goods in process inventory:
Beginning balance $100,800
D.M.
D.L.
O.H. F.G.
Ending balance $131,040
Answer: $113,120
Explanation:
Direct material used = Total cost of manufacturing - Direct labor - Factory overhead
Total cost of manufacturing = Ending WIP + Cost of manufacturing - Beginning WIP
= 131,040 + 324,800 - 100,800
= $355,040
Direct labor = Factory overhead * 100/60
= 90,720 * 100/60
= $151,200
Direct materials used = 355,040 - 151,200 - 90,720
= $113,120
Champion Toys just purchased some MACRS 5-year property at a cost of $230,000. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. Assuming the firm foregoes all bonus depreciation, the book value of the asset as of the end of Year 2 can be calculated as: _______________
a. $230,000(1 − .20 − .32).
b. $230,000([1 − (.20)(.32)].
c. $230,000(1 − .20)(1 − .32).
d. $230,000/(1 − .20 − .32).
e. $230,000(.20)(.32).
Answer: a. $230,000(1 − .20 − .32).
Explanation:
Using the MACRS convention, the depreciation in year 2 will be sum of the first and second year depreciation rates according to MACRS.
The value of the asset in year 2 can therefore be calculated as:
= Cost * ( 1 - sum of first and second year depreciation)
= 230,000 * (1 - (20% + 32%))
Which can be written as:
= 230,000 * (1 - 20% - 32%)
Value would therefore be:
= 230,000 * (1 - 20% - 32%)
= $110,400
If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.)
Answer:
EOM depreciation expense $100
accumulated depreciation $100
Explanation:
Depreciation is a method used in expensing the cost of an asset.
Yearly Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($3750 - $150) / 3 = $1200
Monthly depreciation = yearly depreciation / 12
1200 /12 = 100
Accumulated depreciation is sum of depreciation expense
Typical Request and Response Messages
The purpose of many business messages is to make a request or to reply to previously received communication. Familiarize yourself with the organization of these messages so you can communicate your purpose and achieve a positive outcome.
Read the scenario:
The office manager asks you for advice on how to structure a request message with numerous questions.
What advice would you give?
A. Give an approximate date for the deadline in the body.
B. Place the deadline in the opening.
C. Set an end date to take action in the closing.
Read the following request message:
To: Customer Support
From: Helen Martin
Subject: Warranty Information for Netbook Computer
Dear Customer Service,
I need this information by noon tomorrow at the latest. My team has an important presentation to give, and my netbook crashed while we were working on the presentation. I can’t find the warranty information anywhere. So I have a few questions.
Where is my warranty information? How long does it normally take to repair these machines? Do I have to mail the netbook to you, or can I bring it to your local repair shop?
Will you please answer these questions in a timely manner? Thank you in advance for your help.
Regards,
Helen Martin
1. Where do I find my warranty information?
Reason A: 2. How long does the average netbook repair take?
3. Do I need to mail in my netbook for repairs or bring it to your local repair shop?
Revision B: Where is my warranty information? How long does the average repair take? Do I have to mail in my netbook?
Revision C:
Where do I find the information?
How long does it take?
Can I take it to my local shop?
Which of the preceding revisions is the best revision for the body of this message?
A. Revision B
B. Revision C
C. Revision A
In addition to making requests, you will have to respond to requests in the business world.
Complete the following sentence with the dropdown menu.
Direct response messages might _______?
A. include long, flowery descriptions
B. use the "me" view
C. supply explanations and additional information
Many businesses use social media to communicate with customers. In order to make the most of social media, you should learn how to respond to various types of customer comments.
Read the scenario, and then answer the question.
You manage the social media presence of a company that manufactures travel apparel and gear. A customer posts an angry comment about a suitcase that failed to function properly after its first use. This is not the first complaint the product has received.
How should you respond to the customer?
A. Acknowledge the problem, and let the customer know that the company is working to rectify the situation.
B. Document and delete the comment. You don’t want news of the flawed product to spread.
C. Let the comment stand. No response is necessary.
Answer:
B. Place the deadline in the opening.
A. Revision B
B. Use the "me" view
A. Acknowledge the problem, and let the customer know that the company is working to rectify the situation.
Explanation:
Customer service is the most difficult task. If a customer is angry because of mis functioning of a product then concerns should be heard with patience and the company staff should try to resolve these issues and satisfy customer properly. One angry customer may take away 100 potential customers of a business.
Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending retained earnings to answer the rest of the questions.
Assets Liabilities
Beginning of Year: $29,000 $16,000
End of Year: $63,000 $29,000
Required:
a. What is the equity at the beginning of the year? 13000
b. What is the equity at the end of the year? 34000
c. If the company issues common stock of $5,500 and pay dividends of $36,700, how much is net income (loss)?
Answer:
a. $13,000
b. $34,000
c. $10,200
Explanation:
a. Calculation to determine the equity at the beginning of the year
Asset = Liabilities + Equity
$29000 = $16000 + Equity
Equity=$29,000-$16,000
Equity = $13,000
Therefore the equity at the beginning of the year is $13,000
b. Calculation to determine the equity at the end of the year
Asset = Liabilities + Equity
$63000 = $29000 + Equity
Equity = $63000-$29,000
Equity=$34,000
c. Calculation to determine how much is net income (loss)
Opening Equity + Issued common stock – dividend + Net income = Closing Equity
$13,000 + $36,700 - $5,500 + Net income = $34,000
$44,200+ Net income = $34,000
Net income=$44,200-$34,000
Net income=$10,200
Therefore the net income is $10,200
Louis Vuitton decides to invest $80,000,000 into a shoe factory in Milan from its money market account. The money market account was earning 1% in interest per year or $800,000. Louis Vuitton could have also earned $200,000 from investing the $80,000,000 in a handbag factory. What is its opportunity cost for Louis Vuitton based off of the information in presented this situation?
a. $200,000
b. $1,000,000
c. $80,000,000
d. $800,000
Answer:
d. $800,000
Explanation:
In opportunity cost parlance, we talk about the cost/benefit forgone of the next best alternative, not for all alternatives forgone.
The benefit forgone of the next best alternative is the $800,000 that could have been earned if the funds have been invested in the money market account, in other words, $800,000.
Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $4,000 each. Variable selling expenses are $230 per ATV. The remaining selling expenses are fixed. Administrative expenses are 70% variable and 30% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,880 each.
POLARIX
Income Statement—Consumer ATV Department
For Year Ended December 31, 2017
Sales $619,200
Cost of goods sold 311,320
Gross margin 307,880
Operating expenses
Selling expenses $160,000
Administrative expenses 42,500 202,500
Net income $105,380
Required:
1. Prepare an income statement for this current year using the contribution margin format.
2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and earning income?
The biggest advantage of business blogs is that they Group of answer choices are the primary method of internal business communications. provide anytime access to digital audio and video files containing corporate training, marketing, and informational messages. have the potential to reach a vast, far-flung audience. can safeguard against hackers and rival companies.
Answer:
have the potential to reach a vast, far-flung audience
Explanation:
A business blog (b-blog) is the blog that could be published and it can be either involved the communication of the company done internally or the same should be posted at the internet
So the advantage of writing the business blogs is that it could be reached to the general audience at the fastest way so that everyone could be familiar with the performance and other things about the company
Compute the following amounts for the income statement. Do not use negative signs in your answers.
Kelly's Kandles Antiques Galore
Sales 133200 40,000
Cost of goods sold
Gross margin 25600
Selling expenses 13,500 4,000
General and Admin.expenses 16,100 1000
Net income before tax 51600
Income tax expense 1,200
Net income 32300
Answer:
Therefore, we have:
Kelly's Kandles Antiques Galore
Sales 133200 40,000
Cost of goods sold 52,000 14,400
Gross margin 81,200 25600
Selling expenses 13,500 4,000
General and Admin. expenses 16,100 1000
Net income before tax 51600 20,600
Income tax expense 19,300 1,200
Net income 32300 19,400
Explanation:
Given:
Kelly's Kandles Antiques Galore
Sales 133200 40,000
Cost of goods sold
Gross margin 25600
Selling expenses 13,500 4,000
General and Admin. expenses 16,100 1000
Net income before tax 51600
Income tax expense 1,200
Net income 32300
For Kelly's Kandles, we have:
Gross margin = Selling expenses + General and Admin. expenses + Net income before tax = 13,500 + 16,100 + 51,600 = 81,200
Cost of goods sold = Sales - Gross margin = 133200 - 81,200 = 52,000
Income tax expense = Net income before tax - Net income = 51600 - 32300 = 19,300
For Antiques Galore, we have:
Cost of goods sold = Sales - Gross margin = 40000 - 25600 = 14,400
Net income before tax = Gross margin - Selling expenses - General and Admin. Expenses = 25,600 - 4,000 - 1,000 = 20,600
Income tax expense = Net income before tax - Net income = 20,600 - 1,200 = 19,400
Therefore, we have:
Kelly's Kandles Antiques Galore
Sales 133200 40,000
Cost of goods sold 52,000 14,400
Gross margin 81,200 25600
Selling expenses 13,500 4,000
General and Admin. expenses 16,100 1000
Net income before tax 51600 20,600
Income tax expense 19,300 1,200
Net income 32300 19,400
Correlation Coefficient Matrix A is consistent with the theory of demand for attendance (i.e. that quantity demanded decreases as price increases.)
A. True
B. False
Answer:
Correlation Coefficient Matrix A
A. True
Explanation:
A Correlation Coefficient Matrix is a tabular display of the correlation in variables, showing the linear relationships between each other. The variables are shown in rows and columns, and each cell in the table contains the correlation coefficient. The Correlation Coefficient Matrix A could be used to determine a team's winning percent scores when the revenues are checked.
________ controls cover security processes that are designed by strategic planners and implemented by the security administration of the organization. a. Operational b. Informational c. Technical d. Managerial
Answer:
d. Managerial
Explanation:
The managerial controls covers the process of the security that could be designed via strategic planners and the same should be implemented via the organization security administration
So as per the given situation, the option d is correct
And, the rest of the options are incorrect
The same should be relevant
Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (1,827 bars) are as follows: Ingredient Quantity Price Cocoa 600 lbs. $0.40 per lb. Sugar 180 lbs. $0.60 per lb. Milk 150 gal. $1.70 per gal. Determine the standard direct materials cost per bar of chocolate. If required, round to the nearest cent.
Answer:
Roanoke Company
The standard direct materials cost per bar of chocolate is:
= $0.33.
Explanation:
a) Data and Calculations:
A batch of chocolate = 1,827 bars
Standard Costs for a batch:
Ingredient Quantity Price
Cocoa 600 lbs. $0.40 per lb.
Sugar 180 lbs. $0.60 per lb.
Milk 150 gal. $1.70 per gal.
Ingredient Quantity Price Total Cost
Cocoa 600 lbs. $0.40 per lb. $240.00 (600 * $0.40)
Sugar 180 lbs. $0.60 per lb. 108.00 (180 * $0.60)
Milk 150 gal. $1.70 per gal. 255.00 (150 * $1.70)
Total cost of batch of chocolate = $603.00
Cost per bar = $0.33 ($603.00/1,827)
Otobai Motor Company just paid a dividend of $1.40. Analysts expect its dividend to grow at a rate of 18 percent for the next three years and then a constant rate of 5 percent thereafter. What is the expected dividend per share at the end of year 5?
a. $2.35.
b. $2.54.
c. $2.91.
d. $1.50.
Answer:
b. $2.54.
Explanation:
The computation of the expected dividend per share at the end of year 5 is shown below:
= Dividend per share × (1 + growth rate)^number of years × (1 + growth rate)^remaining years left
= 1.40 × (1+18%)^3 × (1 + 5%)^2
= $2.54
hence, the expected dividend per share at the end of year 5 is $2.54
Morgana Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated annual overhead cost for each activity is $140,000, $240,000, and $54,000, respectively. The cost driver for each activity and the estimated annual usage are number of setups 2,000, machine hours 24,000, and number of inspections 1,200.
Required:
Compute the overhead rate for each activity.
Answer:
Machine setups= $70 per setup
Machining= $10 per machine hour
Inspection= $45 per inspection
Explanation:
To calculate the allocation rate for each activity, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine setups= 140,000 / 2,000= $70 per setup
Machining= 240,000 / 24,000= $10 per machine hour
Inspection= 54,000 / 1,200= $45 per inspection
Flag
Collective case studies are known as multiple-case studies, cross-case studies, comparative case studies and contrasting case studies. What is a cross-case study?
Answer:
Explanation:
Cross case studies involves the use to several individual case studies in other to support a scientific study or research with the aim of reaching a reasonable and acceptable conclusion which can be generalized and adopted for use in similar cases. Researchers usually employ the use of cross case case study in the formulation of new knowledge by collating several case studies based on the research scenario, then rigorous relationships are examined by comparing and contrasting features of the existing cases.
Your boss asked you to analyze Green Hamster Manufacturing's performance for the past three years and prepare a report that includes a benchmarking of the company's performance. Using the company's last three years of financial reports, you've calculated its financial ratios, including the ratios of Green Hamster Manufacturing's competition-that is, comparable ratios of other participants in the industry-and submitted the report.
Along with calculating the ratios, what else is needed for your report?
a. Making observations and identifying trends that are suggested by the ratio analysis
b. Identifying the factors that drive the trends in the ratios
c. Both of the above
Most decision makers and analysts use five groups of ratios to examine the different aspects of a company's performance. Indicate whether each of the following statements regarding financial ratios are true or false?
Statements
One possible explanation for an increase in a firm's profitability ratios over a certain time span is that the company's income has increased.
Market-value or market-based ratios help analysts figure out what investors and the markets think about the firm's growth prospects or current and future operational performance.
A company exhibiting a high liquidity ratio means it is likely to have enough resources to pay off its short-term obligations.
Debt or financial leverage ratios help analysts determine whether a company has sufficient cash to repay its short-term debt obligations.
Asset management or activity ratios provide insights into management's efficiency in using a firm's working capital and long- term assets.
Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry. However, like many tools and techniques, ratio analysis has a few limitations and weaknesses. Which of the following statements represent a weakness or limitation of ratio analysis?
A. A firm may operate in multiple industries.
B. A firm's financial statements show only one period of financial data.
C. Different firms may use different accounting practices.
Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry. However, like many tools and techniques, ratio analysis has a few limitations and weaknesses.
Answer:
1. c. Both of the above
2. a. False
b. True
c. True
d. False
e. True
f. True
3. c. Different firms may use different accounting practices.
Explanation:
Ratio Analysis is one of the method to evaluate a company performance. It helps to analyse a company performance based on different financial metrics. Profitability ratios help to understand company profits position and identify reason for their increase or decrease. Liquidity ratios help understand company's ability to payoff its short term debt obligations.
