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
stealth61 [152]
3 years ago
10

You would like to borrow money three years from now to build a new building. In preparation for applying for that loan, you are

in the process of developing target ratios for your firm. Which set of ratios represents the best target mix considering that you want to obtain outside financing in the relatively near future?A) Times interest earned = 1.7; debt-equity ratio = 1.6; B) Times interest earned = 1.5; debt-equity ratio = 1.2; C) Cash coverage ratio = 0.8; debt-equity ratio = 0.8: D) Cash coverage ratio = 2.6; debt-equity ratio = 0.3: E) Cash coverage ratio = 0.5; total debt ratio = 0.2
Business
1 answer:
zysi [14]3 years ago
5 0

Answer:

Option "D" is the correct answer to the following statement.

Explanation:

The cash coverage ratio helps find the available cash in hand or cash at the bank to pay for the expenditure of a loan. The ratio must be considerably higher to 1: 1, it shows our potential to pay interest. In this situation Option "D" has the highest Cash coverage ratio.

The debt-equity ratio is used to find the firm's credibility.

You might be interested in
Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1 for $300,000. During the year Sheboyga
Misha Larkins [42]

Answer:

Option C. Debit Cash and credit Stock Investments

Explanation:

The reason is that in the equity method of recording the dividends receipts, it is always deducted from the stock investment and the relevant share of reported net income of the associate is added to the stock investment.

So mathematically,

Stock Investment Under Equity Method = Opening Value for the year + Share of Net Income - Dividend received

Stock Investment Under Equity Method = $300,000 + $160,000 * 25% + $60,000 * 25% = $325,000

The above treatment shows that the recording of dividends include credit to stock investment and the cash receipt is always debited.

So the double entry would be:

Dr Cash $15,000

Cr Dividends $15,000

So the option C is correct.

3 0
3 years ago
Differential Analysis for a Discontinued Product A condensed income statement by product line for Healthy Beverage Inc. indicate
Varvara68 [4.7K]

Answer:

Healthy Beverage Inc.

a) Differential Analysis

1) Continue Fruit Cola (Alt. 1)

Sales                            $12,750,000

Cost of goods sold         8,500,000

Gross profit                  $4,250,000

Operating expenses      6,000,000

Loss from operations ($1,750,000)

2) Discontinue Fruit Cola (Alt. 2)

Differential Effect on Income (Alternative 2):

Fixed costs:

Cost of goods sold        $2,125,000

Operating expenses          900,000

Income (Loss)               ($3,025,000)

b. Should Fruit Cola be retained ?

The production and sale of the Fruit Cola should be continued.  Discontinuing it would not save the company the incurrence of the fixed cost.

Explanation:

Differential analysis is a managerial accounting technique for analyzing the different costs and benefits that would arise from alternative solutions to a particular problem.

In the above scenario, discontinuing the production and sale of Fruit Cola would not save the company the fixed costs, so the product should be continued.  It is not the product that is causing the net loss but allocated fixed costs.  Fixed cost is a sunk cost that is not relevant in differential analysis type of decision making.

5 0
2 years ago
Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the follo
GalinKa [24]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The company's activity-based costing system has the following seven activity cost pools:

Labor-related $ 19,600 10,000 direct labor-hours

Machine-related $ 7,000 7,000 machine-hours

Machine setups $ 23,400 600 setups

Production orders $ 16,500 500 orders

Product testing $ 22,400 800 tests

Packaging $ 62,900 3,700 packages

General factory $ 60,000 10,000 direct labor-hours

Activity rate= total estimated activity cost for the period/ total amount of allocation base:

Labor-related= 19600/10000= $1.96

Machine related= 7000/7000= $1

Machine setups= 23400/ 600= $39

Production orders= 16500/500= $33

Product testing=  22400/800= $28

Packaging= 62900/3700= $17

General factory= 60000/10000= $6

7 0
3 years ago
A firm engages in a new type of financial transaction that has a material effect on its earnings. An analyst should most likely
slega [8]

Answer:

management has not explained its business purpose

Explanation:

Since in the question it is mentioned that the firm is engaged in the new financial transaction that contains the material impact on the earnings so this represents that it could be come under the pre existed accounting standards.

Also everyone should be aware of the business purpose plus it is not established for changing off the financial statements

So it would be suspicious because the purpose of the business could not be explained

4 0
3 years ago
Classifying Costs as Materials, Labor, or Factory Overhead Indicate whether the following costs of Procter & Gamble, a maker
AfilCa [17]

Answer:

a. factory overhead cost

b. factory overhead cost

c. factory overhead cost

d. direct labor cost

e. direct materials cost

f. direct labor cost

g. factory overhead cost

h. direct materials cost

i.  direct materials cost

j. factory overhead cost

Explanation:

Direct Material Costs and Direct Labor Costs are easily traceable to the cost object whilst its difficult to trace Factory Overhead Costs to the cost object.

8 0
3 years ago
Other questions:
  • Which term describes judging an individual based on the group to which they belong?
    9·2 answers
  • What happens to the equilibrium price when supply go down
    15·1 answer
  • #1 Jared is campaigning to become president of the United States. Along his career path, Jared served as
    12·1 answer
  • Joan is trying to decide if she wants to open her own hair​ salon, or buy an existing one. Curl Up and Dye is a very popular sal
    11·1 answer
  • A __________ is a private investment pool open only to wealthy or institutional investors that is exempt from sec regulation and
    14·1 answer
  • Maribel is putting the finishing touches on her slide presentation. She wants
    11·2 answers
  • A client invests in an equity indexed annuity that has a guaranteed rate of 3% annual return, a 10% cap and 80% participation. i
    6·1 answer
  • Penny Lane and Associates purchased a generator on January 1, 2015, for $6,300. The generator was estimated to have a five-year
    14·1 answer
  • Although skyscrapers are mostly composed of steel and glass, carpenters are often employed to help with construction. How might
    12·1 answer
  • Define term common market​
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!