Questions from Financial Reporting

Q: Some firms do not report the cost of goods sold separately on

Some firms do not report the cost of goods sold separately on their income statements. In such a case, how should you proceed to compute days’ sales in inventory? Will this procedure produce a realist...

Q: Explain the influence of the use of LIFO inventory on the inventory

Explain the influence of the use of LIFO inventory on the inventory turnover.

Q: Several comparisons can be made to determine the short-term debt

Several comparisons can be made to determine the short-term debt-paying ability of an entity. Some of these are: a. Working capital b. Current ratio c. Acid-test ratio d. Cash ratio 1. Define eac...

Q: Discuss how to use working capital in analysis.

Discuss how to use working capital in analysis.

Q: The following information for Gaffney Corporation covers the year ended December 31

The following information for Gaffney Corporation covers the year ended December 31, 2012: Required a. Will net income or comprehensive income tend to be more volatile? Comment. b. Which income figu...

Q: Both current assets and current liabilities are used in the computation of

Both current assets and current liabilities are used in the computation of working capital and the current ratio, yet the current ratio is considered to be more indicative of the short-term debt-payin...

Q: In determining the short-term liquidity of a firm, the

In determining the short-term liquidity of a firm, the current ratio is usually considered to be a better guide than the acid-test ratio, and the acid-test ratio is considered to be a better guide tha...

Q: Discuss some benefits that may accrue to a firm from reducing its

Discuss some benefits that may accrue to a firm from reducing its operating cycle. Suggest some ways that may be used to reduce a company’s operating cycle.

Q: Discuss why some firms have longer natural operating cycles than other firms

Discuss why some firms have longer natural operating cycles than other firms.

Q: Would a firm with a relatively long operating cycle tend to charge

Would a firm with a relatively long operating cycle tend to charge a higher markup on its inventory cost than a firm with a short operating cycle? Discuss.