Brick Works, Inc What Impact Will Collecting $56,000 Due from Customers Have on on December

question 8

Multiple Choice

Brick Works, Inc.had a current ratio of 1.5 to 1 on December 31 of the current year.On that date, the company's assets were as follows: $\begin{array}{lr}\text { Cash } & \$ 100,000 \\\text { Accounts receivable, net } & 800,000 \\\text { Inventory } & 960,000 \\\text { Prepaid expenses } & 25,000 \\\text { Equipment, net } & \underline{2,600,000} \\\text { Total assets } & \$ 4,485,000 \\\end{array}$ What impact will collecting $56,000 due from customers have on Brick Work's inventory turnover?

• A)It will increase.
• B)It will decrease.
• C)It will have no effect.
• D)The amount of current liabilities is needed to determine the answer.

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Definitions:

Preferred Stock

A type of stock that typically guarantees dividends and has priority over common stock in asset liquidation.

Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company distributes to its shareholders.

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a certificate.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price, often used by investors to assess the income-generating ability of a stock.