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Hunter-Best [27]
3 years ago
13

Alpha Manufacturing has interest expense of $12 million, total assets of $184 million, sales of $176 million, long-term debt of

$16.4 million, and net income of $15 million. How will interest expense be recorded in the common-size income statement?
Business
1 answer:
erma4kov [3.2K]3 years ago
7 0

Answer:

0.068

Explanation:

Common size income statement in which we divide all the items with it's revenue. So, interest is $12 M, and sales is $176 M.

Dividing 12/176= 0.068

That means the interest is 6.8% of revenue. Common size is used for comparison purpose. If let's say in next year interest become 15% of revenue then company would know that it's using more debt. It's also used for comparing with competitors.  

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<h3>What is efficient?</h3>

Efficiency is the ability to avoid wasting materials, energy, efforts, money, and time while doing something or producing a desired result. In a broader sense, it is the ability to do things well, successfully, and efficiently.

The work efficiency formula is efficiency = output / input, and the result can be multiplied by 100 to calculate work efficiency as a percentage. This is used in a variety of energy and work measurement methods, such as energy production and machine efficiency.

Business efficiency refers to how much a company or organization can produce given the time, money, and resources available.

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