Describe the differences between the liquidity ratios, solvency ratios and profitability ratios. Identify examples of each type of ratio as well.
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Liquidity ratios indicate a company's ability to pay short-term debts. They focus on current assets and current liabilities. Examples include current ratio, quick ratio, accounts receivable ratios, and inventory ratios. Solvency ratios are used to analyze a company's long-term debt-paying ability and its financing structure. Solvency ratios include debt to assets ratio, debt to equity ratio, and times interest earned ratio. Profitability measures concern a company's ability to generate earnings. These ratios include net margin, asset turnover ratio, return on investment, and return on equity.
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Sparacino Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$6.90 Direct labor$3.90 Variable manufacturing overhead$1.70 Fixed manufacturing overhead $25,200 Sales commissions$1.50 Variable administrative expense$0.55 Fixed selling and administrative expense $8,100 If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A. $33,700 B. $24,750 C. $29,225 D. $42,650
The majority of household debt in the United States consists of
A) credit card debt. B) consumer installment debt. C) collateralized loans. D) unsecured loans, such as student loans.
A population consists of 500 elements. We want to draw a simple random sample of 50 elements from this population. On the first selection, the probability of an element being selected is
a. 0.100 b. 0.010 c. 0.001 d. 0.002
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period:DepartmentDLHLoans ProcessedDirect CostsConsumer14,000 700 $280,000 Commercial8,000 300 $180,000 If Banc Corp. Trust uses a bankwide rate based on direct labor hours, what would be the indirect costs allocated to the Commercial Department?
A. $180,000. B. $144,000. C. $138,000. D. $148,500.