A company with a positive cash balance sells damaged inventory for cash to a customer, at a selling price that is below the cost of the inventory items.
How will this transaction affect the current ratio and the quick (liquidity) ratio immediately after the transaction?
Quick (liquidity) ratio
A. Stay the same
B. Decrease
C. Increase —> Rev increase
Current ratio
D. Decrease
E. Increase
F. Stay the same —--> selling price < COGS
Which of the following is not true concerning a 'top-down' budgeting process
A. The budget sets out the board's targets for the forthcoming period
B. Senior management prepare a budget with little or no input from middle management
C. The time taken to produce the budget is reduced
D. The budget process starts with sales, then progresses to production, materials usage and other functional budgets
A service company has annual sales of £3.2 million and a gross profit margin of 15%. The company has no inventory. The company is currently experiencing short-term cash flow difficulities and the accountant has decided to delay its payments to trade suppliers by one month,
Calculate the amount by which the cash balance will benefit in the short-term from this change in policy, assuming sales are spread evenly over the year. Round your answer to the nearest £.
A. £206,227
B. £226,667
C. £231,884
D. £266,667
A dairy produces 7.000 litres of milk a week for sale to its wholesale bottling customer. The breakeven point has been calculated at 5,000 litres a week with dairy fixed costs running at £520,000 per annum
​​On the basis that the dairy sets the selling price for its milk at variable cost plus 20%, then what is the selling price per litre of mik:
A. £12.00
B. £10.00
C. £8.57
​​D. £8.00