Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Question
Chapter 9, Problem 6Q
To determine
Explain the reasons that the absolute amounts having limited use while comparing companies.
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6. What will be the impact on a company's profit if sales mix shifts between low margin and high margin products?
Explain different possible scenarios.
Sargassum Caribbean Incorporated
Balance Sheet as at December 31, 2020
Assets
Liabilities
Current Assets:
Current Liabilities:
Cash
Accounts Payable
600,000
300,000
200,000
400,000 Notes Payable
900,000
1,500,000 Total Current Liabilities
Accounts Receivable
Inventory
Total Current Assets
900,000
Fixed Assets:
Long-Term Liabilities:
Property, Plant & Equipment
Less: Accumulated Depreciation
1,200,000 Long-Term Debt
1,000,000 Total Long Term Liabilities
200,000
300,000
300,000
Net Fixed Assets
Owners' Equity:
Common Stock ($1 Par)
Capital Surplus
Retained Earnings
Total Owners' Equity
100,000
300,000
100,000
500,000
1,700,000 Total Liabilities & Owners'
Equity
Total Assets
1,700,000
Sargassum Caribbean Incorporated
Income Statement for Year Ending December 31, 2020
Sales
Less: Cost of Goods Sold
Less: Administrative Expenses
Less Depreciation
Earnings Before Interest and
2,500,000
800,000
100,000
104,000
1,496,000
Тахes
Less: Interest Expense
Taxable Income
20.000
1,476,000
663,000…
What can you say about the market value of the company? is it positve or is negative?
Chapter 9 Solutions
Survey Of Accounting
Ch. 9 - 1. Why are ratios and trends used in financial...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - 4. What is the significance of inventory turnover,...Ch. 9 - 5. What is the difference between the current...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - 9. What are some limitations of the earnings per...Ch. 9 - Prob. 10Q
Ch. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Exercise 9-1 Horizontal analysis Winthrop...Ch. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Comprehensive analysis The December 31, 2019,...Ch. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Ratio analysis Compute the specified ratios using...Ch. 9 - Prob. 14ECh. 9 - LO 13-2, 13-3, 13-4, 13-5 Exercise 13-15A...Ch. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Problem 9-21 Ratio analysis Selected data for...Ch. 9 - Prob. 22PCh. 9 - Problem 9-23 Ratio analysis The following...Ch. 9 - Prob. 24PCh. 9 - Prob. 1ATCCh. 9 - Prob. 3ATCCh. 9 - ATC 9-5 Ethical Dilemma Making the ratios look...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- When might it be beneficial for a company to use the FIFO method? When is the weighted-average method more practical?arrow_forward(3) Which size of firm, large or small, is moreprone to business failure? Why?arrow_forwardHow can you debate the benefits and pitfalls of ratio analysis as a stand-alone analysis of a company’s strengths and weaknesses?arrow_forward
- Suggest several reasons why a 2:1 current ratio might not be adequate for a particular company.arrow_forwardWhat does the price/earnings (P/E) ratio show? If one firm’s P/E ratio is lower thanthat of another firm, what factors might explain the difference?arrow_forwardWhat does a relatively high ratio compared with those of competitors in the same industry indicate?arrow_forward
- 1. What is the controllable margin of Greer Company? 2. What is the return on investment of Greer Company?arrow_forwardWhich of the followings is/are drawbacks associated with valuation by comparables with P/S or P/E? Earnings can be negative Company may have no earnings at all Sales may not be representative if products are different Sales can be manipulated i, ii and iii only i and iii only i and ii allarrow_forwardIs it possible for a firm to have price-earnings ratio that is higher than other similar firms? Why or why not?arrow_forward
- Ratio analyses may not be helpful in explaining the performance of the company. Explain the limitations of using ratio analyses in a company. Relevant examples or illustrations should be given.arrow_forwardWhy do larger financial intermediaries tend to have lower transaction costs? A. Diseconomies of scale B. Economies of scalearrow_forwardWhich is not a potential problem of utilizing ratio analysis? A. trends and industry averages are historical in nature. B. financial data may be distorted due to price-level changes. C. firms within an industry may not use similar accounting methods. D. all of the above E. answer not givenarrow_forward
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