12Acc Meanings – Flashcards

In 2016 80 cents of every $1 of total assets has been financed by Suzie the owner of ABC Business the other 20 cents has been financed by debts. Suzie the owner has financed ABC Business above the recommended level of .5:1, however the business may not be taking advantage of borrowed funds to assist the business to grow.

If the ratio is less than .5:1 it is very low (bad) In 2025 43 cents of every $1 of total assets has been financed by Suzie the owner of ABC Business, the other 57 cents has been financed by debts.This is a concern as Suzie the owner is financing less than half of the business assets. And it would be difficult to raise additional funds because outsiders are not going to be willing to lend money if Richard has not made a significant investment to show he is confident about his business and prepared to take a risk.

In 2016 33% is the average mark-up added by ABC Business to the cost price to determine the selling price of the soft toys inventory.

In 2016 there is $2.60 of current assets to pay for every $1 of current liabilities. It tells Suzie the owner that ABC Business should be able to pay its short term debts - those due in the next 12 months.

In 2016 there is only 99 cents of current assets to pay for every $1 of current liabilities. It tells Suzie the owner that ABC Business may not be able to pay its short term debts - those due in the next 12 months.

In 2016 there is only 65 cents of liquid assets to pay for every $1 of liquid liabilities. It tells Suzie the owner that ABC Business may not be able to pay its immediate debts - those due in the next 2-3 months.

In 2016 there is $1.15 of liquid assets to pay for every $1 of liquid liabilities. It tells Suzie the owner that ABC Business should be able to pay its immediate debts- those due in the next 2-3 months.

In 2016 ABC Business is selling their entire stock of inventory 5.5 times a year.

On average, ABC Business' customers are taking 60 days to pay their debts in 2016. Suzie is not managing her accounts receivable effectively as they are taking too long to pay as they are not paying within their monthly credit terms.

On average, ABC Business' customers are taking 24 days to pay their debts in 2016. Suzie is managing her accounts receivable effectively as they are paying within their monthly credit terms.

Working capital of $6,700 means ABC Business has $6,700 more Current assets than Current liabilities in 2016. This means that ABC Business can meet their current debt with their current assets.

For every $1 of assets invested by Suzie the owner in 2016, ABC Business has generated a return of 16%. This indicates that ABC Business is not using its assets very efficiently.

For every $1 invested in ABC Business in 2016, Suzie the owner will receive 12 cents as a return. Suzie the owner is receiving a good return from her business when compared to the current interest rates from bank, which are low risk.

Eg For every $1 of sales ABC Business has in 2016, they earn 25c in gross profit after paying the cost of goods sold and before deducting expenses.

Eg ABC Business's sales have increased by 20% from 2014 to 2016, which means Suzy's sales are improving and it is helping to improve profits.

Eg ABC Business's sales have increased by 20% from 2014 to 2016, which means Suzy's sales are improving and it is helping to improve profits.

Eg For every $1 of sales that ABC Business has in 2016 they spend 5c on administration expenses such as office wages (or list another example from the resource).

Eg For every $1 of sales that ABC Business has in 2016 they spend 3c on distribution costs such as advertising (or list another example from the resource).

Eg For every $1 of sales that ABC Business has in 2016 they spend 2c on interest on loans/mortgage.

In 2016 56 cents of every $1 of total assets has been financed by Suzie the owner of ABC Business, the other 44 cents has been financed by debts. Suzie has financed ABC Business above the recommended level of .5 :1 and is making good use of external finance.