Explaining the upward trend in the inventory turnover ratio requires more examination into the factor responsible for the cause of the increase in inventory turnover. Inventory turnover could be as a result of declining inventory or increasing sales.
<h3>Description of inventory turnover.</h3>
Inventory turnover is an example of an activity ratio Activity ratios measure a firm's efficiency in performing daily tasks.
Inventory turnover is cost of goods sold divided by average inventory.
The higher inventory turnover is, the better. But it should be noted that a higher inventory turnover could be a s result of declining inventory or increasing sales.
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Answer:
overstate net income but days to collect will increase.
Explanation:
A bad debt expense is defined when any receivable is no more collectible as the customer is not able to fulfil or satisfy the obligation in order to pay the obligation of paying an outstanding debt because of some financial problems or due to bankruptcy.
Thus when any organization is more optimistic about the debt collection, it will understate the bad debt expenses and will also overstate the net income. But in this case the number of days to collect the payment increases.
Answer:
664,000 Company's equity
Explanation:
sales 1,660,000
COGS (850,000)
G&A cost (585,000)
EBIT 225,000
Interest expense (59, 000)
EBT 166, 000
Income tax (66,400)
Net income 99,600
We now calculate the present value of the equity based on the free cash flow:
FCF 99,600
k_e 15%
grow = 0
99,600/0.15 = 664,000 Company's equity
<span>Countries with free market economies in which property rights are protected tend to have </span>greater economic growth rates <span>than command economies or economies where property rights are poorly protected.
</span><span>The reason is the lack of infrastructure and supporting business in primitive or undeveloped economies, which may lead to situation in which is more costly to do business. </span>