Maria Has Just Reviewed a Number of Indicators of Financial

question 75

Multiple Choice

Maria has just reviewed a number of indicators of financial control for her firm.One that worries her indicates that the company may soon have trouble making loan payments and clearing its current accounts receivables.In this case,Maria is concerned about the _____ ratio.

• A) profit and loss
• B) profitability
• C) leverage
• D) net working capital
• E) return on investment

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Definitions:

Work In Process

Units of product that are only partially complete.

Conversion Costs

Conversion costs represent the combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.

Equivalent Unit

A measurement used in process costing to equate the work done on units in progress to a number of fully completed units.

Weighted-Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all units available.