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DHN 342- Exam 2 (complete solutions provided).
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DHN 342- Exam 2 (complete solutions provided).
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DHN 342- Exam2 (complete
solutions
provided)
What is a balance sheet? - answer Balance Sheet-
statement of assets, liabilities, and owner's equity
Assets → current (inventory, cash, account
receivable), fixed (property, land, car)
Liabilities → current (account payable, insurance),
fixed (mortgage)
Is a balance sheet static or dynamic? - answer
Static
What is an income statement? - answer Primary
managerial tool reporting revenues, expenses, and
profit or loss as a result of operations for a period
of time.
, Is an income statement static or dynamic? - answer
Dynamic
What is the fundamental equation of a balance
sheet? - answer (cost of the asset - salvage
value) / years of useful life
Be able to calculate the formula for current ratio. -
answer Current ratio
Current Ratio = Current Assets / Current Liabilities
(liquidity)
Be able to calculate the formula for debt-to-equity
ratio. - answer Debt-to-Equity ratio
Debt-to-Equity = Total Liabilities / total equity
Be able to calculate the formula for Inventory
Turnover - answer Inventory Turnover
Cost of goods sold/average inventory
Be able to calculate the formula for Profit Margin -
answer Profit Margin
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