How will you use this knowledge in your future career?

This information is available for the Automotive and Other Operations Divisions of General Motors Corporation for 2006. General

Paraphin [41]

Answer:

A. Inventory turnover ratio = 5.927

B. Current ratio = 0.95

C. Current ratio after adjusting for the LIFO reserve = 0.97

Explanation:

Requirement A

We know,

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

Given,

Cost of goods sold = 164,682

Average inventory = Beginning inventory + Ending inventory

Average inventory = $13,862 + $13,921

Average inventory = $27,783

Putting the values into the formula, we will get

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

Inventory turnover ratio = $164,682 ÷ $27,783

Inventory turnover ratio = 5.927

We know,

Days in inventory = $365 ÷ $5.927

Days in inventory = 61.6 days

Requirement B

We know,

Current ratio = Current asset ÷ Current liabilities

Given,

Current asset = $64,131

Current liabilities = $67,822

Putting the values into the formula, we can get

Current ratio = Current asset ÷ Current liabilities

Current ratio = $64,131 ÷ $67,822

Current ratio = 0.95

We know,

The current ratio shows us how a company pays its current liabilities.

We assume the inventory is reported in the current asset using the LIFO method.

Requirement C

We know,

Current ratio after adjusting for the LIFO reserve = (Current asset + LIFO reserve) ÷ Current liabilities.

Given,

Current asset = $64,131

LIFO reserve = 1,508

Current liabilities = $67,822

Putting the values into the formula, we can get

Current ratio after adjusting for the LIFO reserve = (Current asset + LIFO reserve) ÷ Current liabilities

Current ratio after adjusting for the LIFO reserve = ($64,131 + 1,508) ÷ $67,822

Current ratio after adjusting for the LIFO reserve = 65,639 ÷ $67,822 = 0.97

Current ratio after adjusting for the LIFO reserve = 0.97

8 0

3 years ago

Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor, Almos Garment Corp. If Almo

Novay_Z [31]

Answer:

The present of worth of machine operating cost is $ 228,061.55

Explanation:

In calculating the present worth of the machine operating cost,I grew the cost of $34000 per year from year 3 onwards by 6% , thereafter I discounted the increased machine operating cost with the applicable discount factor in each year as shown in the attached spreadsheet.

Download xlsx

6 0

3 years ago

In order to reduce demand for drugs there must be a symbiosis between ____________.

Inessa [10]

Treatment and enforcement. There is a quizlet on it, just copy and past this question on google and it's the first that pops up.

5 0

4 years ago

Return on Assets is a valuable financial measurement because it indicates how profit margin, asset turnover, and the equity mult

erica [24]

Answer:

True

Explanation:

Return on assets (ROA) is she valuable measure in assessing the effectiveness of company management in utilizing company capital. It is calculated

ROA=

Total Assets/

Net Income

where:

Total Assets=Shareholder Equity+Liabilities

Return on assets is closely related to return on equity as they are both almost used for same purpose which is measuring management's effectiveness in capital utilization. Return on equity differs from return on assets by the inclusion or exclusion of the debt factor in calculating them.

The relationship between ROA and ROE is demonstrated in DuPont formula which is given

ROE=profit margin*asset turnover*shareholder equity

4 0

4 years ago

The steps involved in calculating the consumer price index include, in order:

bogdanovich [222]

Answer:

c. determine the basket, find the prices, compute the basket's cost, choose a base year and compute the inflation rate.

Explanation:

The Consumer Price Index (CPI) is the term that shows the average alteration in prices paid by consumers for the representative basket of goods and services over a given period. Commonly, it is utilized like a estimation of inflation along with GDP deflator. Steps to calculate:

1) Market basket designation: The TCC market basket represents all goods and services purchased by the population for a particular reference. It consists of more than 200 categories and 8 main groups: Food and beverage, housing, clothing, transportation, medical services, recreation, education and communication, and other goods and services.

2) Cost calculation of basket: Once the basket is fixed, the next step in calculating the Consumer Price Index is to find the current and previous prices for all goods and services. This allows you to calculate the cost of the whole basket at any time. The important thing to note here is that the market basket is stable, that is, goods, services, and quantity are not changed. Therefore, it is the only variable that allows you to isolate the effects of price changes over the years.

3) Index calculation: We need to set a base year to really calculate the Consumer Price Index. The base year is a benchmark against which all other years are compared. It can be freely determined, but it is common to keep the same basal year for a few years before moving to a new market for comparison.

4) Inflation Rate Calculation: Finally, the calculated CPI can be used to calculate inflation. To be more precise, inflation is the percentage of changes in the price index from one period to the next.

4 0

3 years ago