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Alex
2 years ago
14

A company uses return on investment (ROI) to measure the performance of its business units. The company manufactures and distrib

utes consumer goods. Last year, management identified a possible shortage of raw materials. To mitigate this risk, a large amount of raw material was bought in advance and stored in the manufacturing plant inventory. As a result of this decision, ROI will __________.
Business
1 answer:
valina [46]2 years ago
5 0

Answer: Decrease

Explanation:

What makes return on investment fantastic is when production and sales is on a steady increase, as production increases and sales follow there after, there would be an increase in return on investment because the increase in sales would make room for expansion giving the business more profit, but in the scenario where raw materials are not promising, there would be a decrease in production overtime and which would also lead to a decrease in return on investment.

You might be interested in
Variable costs are Group of answer choices
Alex

Answer:

B) costs that change with the level of production.

Explanation:

Variable costs are costs that change according to the total production output.

The two main cost components in the production process are fixed costs, which remain to be paid even if the firm shuts down temporarily, and variable costs, which are subject to change according to the level of production.

Therefore, the answer is alternative B)

4 0
3 years ago
Mort Zuba, an automobile company, needs to pay off its loans to banks the following year. The company plans to sell its factorie
harkovskaia [24]

Answer:

Mort Zuba's ability to sell its factories in Astonsia to pay its debts is measured by calculating <u>Liquidity ratios.</u>

Explanation:

Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. These ratios measure the ability of a company to pay off its short-term liabilities when they fall due.

4 0
2 years ago
When the operating activities section of the statement of cash flows is reported using the direct method: Multiple Choice Footno
sp2606 [1]

Answer:

Operating cash receipts minus operating cash payments equals net cash provided (used by) operating activities.

Explanation:

A statement of cash flows is also known as cash flow statement and it is a financial statement which is used to illustrate how changes in income and various account of the balance sheet affect cash and cash equivalents.

The statement of cash flows is also used by financial experts or accountants to breakdown the cash-flow analysis into;

1. Cash-flow from financing activities: it represents the cash flow from debt or equity. Typically, it's the costs used in a financing a business.

2. Cash-flow from investing activities: it represents the cash flow from investment such as proceeds from the sale of plant, equipments, etc.

3. Cash-flow from operating activities: it represents cash-flow and transactions from operational business activities such as employee salary, sales of goods, etc.

In Financial accounting, the direct method of reporting operating cash flows uses actual cash inflows and outflows from the operating activities of a company by generating data from the income statement (cash receipts and cash disbursements/payments).

Hence, when the operating activities section of the statement of cash flows is reported using the direct method; operating cash receipts minus operating cash payments (disbursements) equals net cash provided, that is typically used by operating activities.

4 0
3 years ago
Blue Spruce Corp. had the following transactions.
tatuchka [14]

Answer:

1. Dr Cash $10,300

Cr Land $8,240

Cr Gain on Sale of Land $2,060

2. Dr Cash $21,200

Cr Common Stock $21,200

3. Dr Depreciation Expense $12,400

Cr Accumulated Depreciation - Building $12,400

4. Dr Salaries Expense $7,200

Cr Cash $7,200

5. Dr Equipment $8,100

Cr Common Stock $1,200

Cr Additional Paid-in Capital $6,900

6 Dr Cash $1,296

Dr Loss on Sale of Equipment $1,944

Dr Accumulaed Depreciation -Equipment $7,560

Cr Equipment $10,800

Explanation:

Preparation of the journal entry.

1. Dr Cash $10,300

Cr Land $8,240

Cr Gain on Sale of Land $2,060

($10,300-$8,240)

2. Dr Cash $21,200

Cr Common Stock $21,200

3. Dr Depreciation Expense $12,400

Cr Accumulated Depreciation - Building $12,400

4. Dr Salaries Expense $7,200

Cr Cash $7,200

5. Dr Equipment $8,100

Cr Common Stock $1,200

(1,200*$1)

Cr Additional Paid-in Capital $6,900

($8,100-$1,200)

6 Dr Cash $1,296

Dr Loss on Sale of Equipment $1,944

($10,800-$7,560-$1,296)

Dr Accumulaed Depreciation -Equipment $7,560

Cr Equipment $10,800

5 0
3 years ago
Under the accrual basis of accounting:_________.
madam [21]

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Answer: Option C.

<u>Explanation:</u>

Accrual basis is a technique for recording bookkeeping exchanges for income when earned and costs when brought about. A key bit of leeway of the collection premise is that it matches incomes with related costs, so the total effect of a business exchange can be seen inside a solitary announcing period.

Accounting method that records incomes and costs when they are brought about, paying little heed to when money is traded. The expression "accrual" alludes to any individual section recording income or cost without a money exchange.

7 0
3 years ago
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