Managerial Accounting Decision Making
Working Capital - correct answer current assets - current liabilities Current ratio - correct answer current assets/current liabilities Quick ratio - correct answer quick assets/quick liabilities (quick assets cash, marketable securities, accounts receivable, short-term notes receivable) Accounts receivable turn over - correct answer sales on account/average accounts receivable how quickly companies collect AcR Average collection period - correct answer 365 day/AcR turnover Inventory turn over - correct answer COGS/Average inventory balance Average Sale period - correct answer 365 days/inventory turnover Operating cycle - correct answer average sale period + average collection period how long between receiving materials from suppliers and receiving payment from customers total asset turnover - correct answer sales/total assets how efficient assets are producing sales times interest earned - correct answer EBIT/Interest Expense how able a firm is able to pay interest charges of current earnings debt to equity ratio - correct answer total liabilities/total equity ability to pay debt using equity Equity multiplier - correct answer Average total assets/average stockholders' equity how companies are mixing debt
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