Podcast
Questions and Answers
What is the trade-off that companies face when determining the appropriate level of working capital?
What is the trade-off that companies face when determining the appropriate level of working capital?
- Between risk and return
- Between long-term and short-term investments
- Between equity and debt
- Between liquidity and profitability (correct)
What is the primary reason why companies invest in accounts receivable?
What is the primary reason why companies invest in accounts receivable?
- To maintain a high current ratio
- To offer credit to customers and increase sales (correct)
- To reduce accounts payable
- To finance long-term investments
Which of the following is a component of working capital that managers and financial analysts usually focus on?
Which of the following is a component of working capital that managers and financial analysts usually focus on?
- Intangible Assets
- Long-term Investments
- Property, Plant and Equipment
- Accounts Payable (correct)
What is the term used to describe the amount of time it takes to sell inventory, collect accounts receivable, and pay accounts payable?
What is the term used to describe the amount of time it takes to sell inventory, collect accounts receivable, and pay accounts payable?
What is the primary purpose of accounts receivable?
What is the primary purpose of accounts receivable?
What is the concept that defines an asset as a right that has the potential to produce economic benefits?
What is the concept that defines an asset as a right that has the potential to produce economic benefits?
What is the primary characteristic of the FIFO cost method?
What is the primary characteristic of the FIFO cost method?
Under the LIFO cost method, which costs are assigned to cost of sales?
Under the LIFO cost method, which costs are assigned to cost of sales?
What is the value of the ending inventory using the FIFO cost method?
What is the value of the ending inventory using the FIFO cost method?
What is the total cost of sales using the FIFO cost method?
What is the total cost of sales using the FIFO cost method?
What is the primary difference between the FIFO and LIFO cost methods?
What is the primary difference between the FIFO and LIFO cost methods?
What is the purpose of the FIFO and LIFO cost methods?
What is the purpose of the FIFO and LIFO cost methods?
In a period of rising prices, which inventory cost method would result in the highest Cost of Goods Sold (COGS)?
In a period of rising prices, which inventory cost method would result in the highest Cost of Goods Sold (COGS)?
What is the primary purpose of the current ratio in financial analysis?
What is the primary purpose of the current ratio in financial analysis?
In a period of falling prices, which inventory cost method would result in the lowest Ending Inventory (EI)?
In a period of falling prices, which inventory cost method would result in the lowest Ending Inventory (EI)?
What is the main benefit of accounting information in decision making?
What is the main benefit of accounting information in decision making?
What is the impact of a high current debt on a company's creditworthiness?
What is the impact of a high current debt on a company's creditworthiness?
Which of the following is NOT a benefit of using the current ratio in financial analysis?
Which of the following is NOT a benefit of using the current ratio in financial analysis?
