1. Sam Robson wants to compare a specific metric for company J with the same metric for company K. Which of the following kinds of analyses is Robson most likely to conduct?
A. Cross sectional analysis
B. Longitudinal analysis
C. Trend analysis
2. Which of the following is most likely accurate about the interpretation of activity ratios?
A. A working capital turnover of 3.6 indicates that the company generates $3.6 of net income for every $1 of working capital.
B. A low fixed asset turnover ratio may indicate a labor intensive environment.
C. For some companies, the working capital ratio can be near zero or negative.
3. Faddy Corporation reported revenue of $150,000 for 2011. The income reported was $65,000. The opening balance of the accounts receivables account was $40,000 and the closing balance was $52,000. Assuming a 360-days year, what are the days of sales outstanding for Faddy Corporation?
Tomorrow’s questions of the day will be on the topic of R29: Inventories