The McCumber Corporation Data for the Current Year

question 34

Multiple Choice

The McCumber Corporation data for the current year:

With respect to selling/general expenses,what would a horizontal analysis report?

• A)The current ratio is 0.92.
• B)There was a 4.47% increase from prior to current year.
• C)There was a 4.28% decrease from prior to current year.
• D)Selling/general expenses are 7.74% of net sales revenue.

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Definitions:

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, the terms of credit to extend, and how to collect payments.

Economic Order Quantity

A calculation used to determine the most cost-effective quantity of inventory to order, minimizing both ordering and holding costs.

Safety Stock

Additional inventory beyond expected demand, kept on hand to prevent stockouts typically caused by uncertainties in supply or demand.

Inventory

The total amount of goods and materials held by a company intended for sale or used in production, crucial for managing supply chains and fulfilling customer orders.