The Nichols Corporation Data for the Current Year: What

question 117

Multiple Choice

The Nichols Corporation data for the current year: What would a horizontal analysis report with respect to current liabilities?

• A)Current liabilities saw a 30% increase from the prior year to the current year.
• B)Current liabilities are 11.77% of total capital.
• C)The current ratio is 1.06.
• D)Current liabilities saw a 76.92% increase from the prior year to the current year.

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Definitions:

Fixed Overhead

Costs that do not change with the level of production or sales, such as salaries, rent, and insurance, which are necessary for the operation but do not vary with the volume of output.

Direct Labor-Hours

A measure of the labor directly involved in the production of goods, often used in calculating standard costs and variances.

Property, Plant, and Equipment

Long-term tangible assets that are used in the normal operations of a business, such as land, buildings, and equipment.

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.