1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
belka [17]
2 years ago
14

Explain why a $ 50,000 increase in inventory during the year must be included in developing cash flows from operating activities

under both the direct and indirect methods.
Business
1 answer:
Simora [160]2 years ago
5 0

Explain why a $50,000 increase in inventory during the year must be included in computing cash flows from operating activities under both the direct and indirect methods. The $50,000 increase in inventory must be used in the statement of cash flow calculations because it increases the outflow of cash (all else equal).

An increase in the company's inventory indicates that the company has purchased more goods than it has sold. It means an additional cash outflow as cash must be used to purchase additional consumables. Cash outflows have a negative or unfavorable impact on a company's cash position.

Therefore, as inventories increase, the company will have to spend money to buy them (cash outflow). On the other hand, the decrease in inventory will be cash in for the amount sold. We arrive at the following rule: Inventory Increase => Cash Outflow (Negative)

An indirect way to create a cash flow statement is the change in the amount of cash due to operating activities in the account on the balance sheet. and adjust the net profit for the year.

Learn more about inventory here;

brainly.com/question/24868116

#SPJ4

You might be interested in
The production function for laser eye surgery is given by Q = 20K0.5L0.5, where Q is the number of laser eye surgeries performed
Naddika [18.5K]

The marginal product of labor is 10.

Data and Calculations:

Production function = Q = 20K0.5L0.5 = 20 x K x 0.5 x L x 0.5

Where:

Q = number of surgeries per day

K = number of machines

L = number of employees

Assuming that:

K = 2

L = 2

Therefore, Q1 = 20 x 2 x 0.5 x 2 x 0.5

= 20 surgeries per day

Q2 = 20 x 2 x 0.5 x 3 x 0.5

= 30 surgeries per day

Change in productivity = 10 (30 - 20)

Change in labor = 1 (3 - 2)

Marginal product of labor = change in output / change in labor

= 10 (10/1)

Thus, the marginal product of labor for the production function is 10.

Learn more: brainly.com/question/4186143

7 0
3 years ago
Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm’s t
posledela

Answer:

Based on the DuPont equation and given information, ROE of Harrington Inc is 13.818%.

Explanation:

We have to find the total equity and total debt of Harrington Inc in order to apply the DuPont equation for finding ROE because net income, sales of Harrington Inc. are already given.

- To find Harrington Inc's total debt, apply the Debt-to-capital formula: The Harrington Inc's total debt/The Harrington Inc's total capital = 45% =>  Harrington Inc's total debt = The Harrington Inc's total capital * 45% = $250,000 x 45% = $112,500;

- To find Harrington Inc's total equity, apply the accounting equation Asset = Liabilities + Owner's Equity: The Harrington Inc's total equity = The Harrington Inc's total asset - The Harrington Inc's total debt = $250,000 - $112,500 = $137,500;

- Using the Dupont equation, calculate the ROE as followed:

(NI/Sales)* (Sales/ Total assets) * (Total assets/ Total common equity) = (19,000/325,000) * ( 325,000/ 250,000) * (250,000/137,500) = 13.818%.

- Thus, the ROE = 13.818%.

5 0
3 years ago
Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternat
Wewaii [24]

Answer:

Please see attachment

Explanation:

Please see attachment

3 0
3 years ago
Bee Sting bought 400 shares of Google at $399.75 per share. Assume a commission of 2% of the purchase price. What is the total t
daser333 [38]
Given:
400 shares of Google
399.75 per share
2% commission on purchase price.

400 shares * 399.75/share = 159,900
159,900 x 1.02 = 163, 098

The total to Bee Sting is $163,098
5 0
3 years ago
Which of the following is the BEST reason to use cash for making purchases?
zhuklara [117]

Answer:

C.

Explanation:

4 0
3 years ago
Read 2 more answers
Other questions:
  • Fresnas Inc. is a furniture manufacturing company. It has taken the initiative of incorporating social responsibility as one of
    15·1 answer
  • As the CEO of a prosperous young company whose business processes have become so complicated that you can no longer deal with al
    8·1 answer
  • The number of shares currently in the hands of stockholders is the same as the number of shares________. a. issued b. authorized
    11·1 answer
  • In 2019, Sayer, who is single, have an outright gift of $53,000 to a friend, Johnson, who needed the money to pay medical expens
    11·1 answer
  • Who was the first missionary to arrive in Africa?​
    15·2 answers
  • Which spreadsheet type will determine how well a business has done over the past year?
    11·1 answer
  • With rapid advancements of science and technology, the emergence of artificial intelligence is transforming traditional practice
    14·1 answer
  • Stephanie has been segmenting the market to help her grow her catering business. She is now at final stage in the segmentation p
    8·1 answer
  • Which action is related to short-term planning?​
    13·1 answer
  • for a monopolist, the market demand curve: a is also the demand for the monopolist's product. b is not important since the monop
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!