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HBX Financial Accounting- Questions & Answers
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HBX Financial Accounting- Questions & Answers
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HBX Financial Accounting- Questions &Answers
Accounts Receivable Turnover is calculated by dividing the annual credit sales by the average
accounts receivable balance. In this case, we assume that all of Apple's revenue is from sales
made on credit terms. Again we will use a 2-point average of beginning and end of year accounts
receivable balances.
Credit Sales / Average Accounts Receivable = 170,,016 = 14.22
Average Collection Period is calculated by dividing Average A/R by the average daily Credit
Sales, which is Credit Sales divided by 365.
Average Accounts Receivable / Average Daily Credit Sales = 12, = 25.66 Correct
Ans-Accounts Receivable Turnover:
=C14/AVERAGE(B3:C3)
Average Collection Period:
=AVERAGE(B3:C3)/(C14/365)
Accounts Payable Turnover is calculated by dividing the annual credit purchases by the average
accounts payable balance. In this case, we do not have access to Apple's credit purchases so we
are using Cost of Sales as a proxy. Again we will use a 2-point average of beginning and end of
year accounts payable balances.
Cost of Sales / Average Accounts Payable = 106,,771 = 4.90
Days Purchases Outstanding is calculated by dividing Average Accounts Payable by the average
daily Cost of Sales, which is Cost of Sales divided by 365.
Average Accounts Payable / Average Daily Cost of Sales = 21, = 74.54 Correct Ans-
There are several formulas that could help you arrive at the correct answer, but one solution is
presented below:
,Accounts Payable Turnover:
=C17/AVERAGE(B7:C7)
Days Payable Outstanding:
=AVERAGE(B7:C7)/(C17/365)
Calculate the Leverage used in the DuPont Framework for H&M based on its Balance Sheet and
Income Statement. Use average balances in your calculation where applicable. (On 11/30/2012,
H&M had total assets of $60,173 and total equity of $43,835.) Correct Ans-In the DuPont
Framework, the leverage ratio is calculated by dividing the average total assets by the average
equity.
Include common stock, retained earnings, and other equity.
Company A has a higher Accounts Payable Turnover Ratio than Company B. Which of the
following statements is true regarding these two companies? Correct Ans-Accounts Payable
Turnover = Credit Purchases / Average Accounts Payable Balance
Accounts Payable Turnover measures the number of times a company can pay off its average
account payable balance during a time period.
Which of the following items is NOT related to a company's ability to pay off its debts?
Correct Ans-Debt to Equity Ratio measures a company's leverage, not ability to pay off debts.
Which of the following is measured by the DuPont Framework? Correct Ans-The return that
a business generates during a period on equity invested in the business by the owners of the
business. This is the definition of ROE (Return on Equity), which is measured by the DuPont
Framework.
, Initech finances their business using a combination of equity and liabilities. Which of the
following numbers is most likely Initech's equity multiplier? Correct Ans-A company that
finances using only equity will have an equity multiplier of 1. Any amount over 1 shows the
proportion financed using liabilities. Since Initech uses a combination of equity and liabilities to
finance operations, the only option that would most likely be their equity multiplier is 1.5.
You have just reviewed the financial statements of a company and you have determined that has
a Profit Margin of 19%. How do you explain this to the owner? Correct Ans-Profit Margin
(Net Income/Sales) measures the ability of a company to make a profit relative to revenue
generated during a period. A Profit Margin of 19% tells us that for every $100 in sales, $19
ended up in Net Income.
Assets Correct Ans-Cash, inventory, equipment, prepaid assets, invoices
Liabilities Correct Ans-Accounts payables, salaries, sales taxes payable, unredeemed gift
certificates, long term debt
Owner's Equity Correct Ans-Contributed capital, retained earnings
Module 4 Explicit transactions Correct Ans-triggered by some sort of activity, event, or
transfer of resources (usually cash) from one party to another; often accompanied by invoices,
receipts, or other paper documentation that initiate the recording of the transaction.
identifying explicit transactions: Correct Ans-(1) A transfer of resources, usually cash
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