CTO) -credit terms 2/14, n/21- 2015 25 days, 2016 31 days, 2017 35 days

unfavourable as well as outside credit terms

Debt Ratio measures...

% of assets financed by liabilities

Increase in GPM and Mark Up means...

Increase in selling price and cost price stays the same

If stock turnover is too fast

business is holding too little stock

meet short term debts before due

Increase Selling Prices, Rotating Stock and Advertising

Both include Net Profit in Calculations

average # of days to convert stock into sales

Financial indicators...

customer satisfaction, liquidity, staff satisfaction

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Profitability & Liquidity

16 termsStudBud Administration515 plays

VCE ACCOUNTING UNIT 4 #profitability #liquidity #accounting

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Questions 16

Answers

1
CTO) -credit terms 2/14, n/21- 2015 25 days, 2016 31 days, 2017 35 days
unfavourable but within credit terms
favourable but outside credit terms
unfavourable as well as outside credit terms
favourable within credit terms
2
to improve CTO ...
decrease selling price
increases selling price
improve DTO & STO
improve ROA
3
Debt Ratio measures...
% of assets financed by liabilities
% of liabilities used for purchase of assets
% of Revenue compared to expenses
% of sales compared to Cost of Sales
4
If GPM increases, so does what?
DTO
CTO
Sales
Net Profit
5
What is excluded in QAR?
interest
stock
GST
Loan
6
Increase in GPM and Mark Up means...
Increase in selling price and cost price stays the same
both decreased but selling more proportionately
Increase in selling price and cost price
cost price increased selling price stays the same
7
If stock turnover is too fast
the business will generate less cash flow
need to increase sales
business is holding too little stock
selling price too high
8
WCR formula is ...
Assets/Capital
Liabilities/Assets
Liabilities/Sales
Assets/Liabilities
9
Liquidity is ...
revenue against expenses
meet short term debts before due
firms ability to earn profit
short term debts by assets over liabilities
10
Improve STO
Buy a delivery van and deliver stock
Increase Selling Prices
Rotating Stock and Advertising
Order more of fast selling stock lines
11
NPM & ROA Link is
Improvement is Decrease Selling Price
Dollar Figure
Both include Net Profit in Calculations
Both include assets
12
GPM formula is
gross profit over cost of sales
gross profit over assets
gross profit over sales
sales over gross profit
13
STO measures...
average number of sales on each piece of stock
amount of stock unsold between periods
Stock Turnover
average # of days to convert stock into sales
14
Which is not a benchmark
Handling of Profitability
Budgeted Performance
Performance in previous periods
Performance of other firms
15
which Strategy doesn't improve DTO
Credit Checks
Threats to Legal Action
Discount
Physical Meetings
16
Financial indicators...
customer complaints, owner satisfaction, bank reference
profitability, liquidity, reliability
customer satisfaction, liquidity, staff satisfaction
profit, stability, capital

Profitability & Liquidity Flashcards | StudBud