How do you make a profit in that case?
And look at this from Wiley:
A company has cash of $100 million, accounts receivable of $600 million, current assets of $1.2 billion, accounts payable of $400 million, and current liabilities of $900 million. What is its acid-test (quick) ratio?
A. 0.11
B. 0.11
C. 1.75
D, 2.11
This answer is correct because the quick (acid) ratio is equal to cash equivalents plus accounts receivable and prepayments divided by current liabilities, or .78 = ($100 million + $600 million) ÷ $900 million.
SMH
Question 20:
PERM-0071
Need a hint?See Reference…
Based on the following data, what is the gross profit for the company?
Sales $1,000,000
Net purchases of raw materials 600,000
Costs of goods manufactured 800,000
Marketing and administrative expenses 250,000
Indirect manufacturing costs 500,000
Beginning inventory Ending inventory
Work in process $500,000 $400,000
Finished goods 100,000 500,000
A. $200,000
B. $400,000
C. $900,000
D. $200,000
This answer is correct because gross profit is equal to sales ($1,000,000) minus cost of goods sold ($400,000), or $600,000. Cost of goods sold is calculated by adding beginning finished goods inventory ($100,000) to cost of goods manufactured ($800,000) and deducting ending finished goods inventory ($500,000).
SMH X2!!! Really Wiley?
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