Answer: Accounting rate of return
Explanation:
The accounting rate of return is the percentage rate of return that is expected on an asset or investment as compared to the initial investment cost of the investment.
In an accounting rate of return, the average revenue from an asset.is divided by the company's initial investment in order to derive the ratio or the return that can be gotten over the lifetime of the investment or asset. The accounting rate of return does not consider cash flows or the time value of money.
Answer: $90,411
Explanation:
Average Accounts payable = Net Purchases * Average collection period / 365
Average collection period is 60 days
Net Purchases as stated is $550,000
Average accounts payable = 550,000 * 60 / 365
= 90,410.9589
= $90,411
Answer:
The correct answer to the given question is Relevant range.
Explanation:
Relevant range , in accounting , can be defined as that amount of activity or range of volume where company's fixed expenses would not differ as the volume of activity changes. This term has relevance with the fixed cost, as if a company's volume decreases then company would try to decrease their fixed cost and similarly if the volume increases the company's fixed expenses would also increase.
Answer: risk
Explanation: 100% satisfaction guarantee is a statement that if a customer of a product (or service) is not satisfied with the item purchased, then the producer will offer a full refund back to the customer. In this case REI allows this option for a period of up to 1 year after the sale was made.
REI utilises this option in an effort to reduce costs attributed to risk. For customers, this is a powerful tool as they are allowed to try the product, while knowing that if they don't like it then they can return it for a full refund. For REI, it increases customer trust as it allows customers to believe that the product is worth the sales price. It also reduces risk as REI is able to test the product out to actual customers and get a feel for if they like it, and what can be improved if needed.
Answer: b. The duration of its liabilities must equal the duration of its assets
Explanation:
Since the company wants to structure its assets and liabilities such that its equity is unaffected by interest rate risk, then the duration of its liabilities must equal the duration of its assets.
It should be noted that when the duration of its liabilities is shorter than the duration of its assets, the duration gap is positive and when there's a rise in interest rate, the worth of assets will be affected more.
When duration of its liabilities is longer than the duration of its assets, the duration gap is negative and when there's a rise in interest rate, the worth of liabilities will be affected more.
Finally, when the duration of its liabilities is equal the duration of its assets, its equity is unaffected by interest rate risk.
