1. If a company wished to maintain the carrying amount in the financial statements of its non-current assets, which of the following would it be unlikely to do?
2. Which of the following is a possible reason why a company's inventory holding period increases from one year to the next?
3. Which of the following items is unlikely to be considered a ‘one‐off’ item which would impact the comparability of ratios?
4. Which of the following is not a valid reason for a decrease in gross profit margin?
5. Hat Haven Co has an asset turnover of 2.0 and an operating profit margin of 10%. It is launching a new product which is expected to generate additional sales of $1.6 million and additional profit of $120,000. It will require additional assets of $500,000.
Assuming there are no other changes to current operations, how will the new product affect these ratios?
Select the impact on the ratios below using the drag and drop options
A. Operating profit margin
6. Use of historical cost accounting means asset values can be reliably verified but it has a number of shortcomings which need to be considered when analysing financial statements.
Which of these is a possible result of the use of historical cost accounting during a period of inflation?