What are some important financial ratios to evaluate with respect to consumer packaged goods?

July 7, 2024 No Comments

A: Since companies that sell consumer packaged goods are traditionally low-margin, high-volume businesses, the most important financial ratios used to evaluate companies in the consumer packaged goods industry are the activity ratios. In addition, to ensure that the company is successful in the long term,

What are some of the advantages and disadvantages of absorption costing?

July 7, 2024 No Comments

A: Companies must choose between using absorption costing or variable costing in their accounting systems. There are advantages and disadvantages with either choice. Some of the primary advantages of absorption costing are the fact that it recognizes all of the costs involved in production (including

What are some of the advantages and disadvantages of DuPont Analysis?

July 7, 2024 No Comments

A: DuPont analysis is a potentially helpful tool for analysis that investors can use to make more informed choices regarding their equity holdings. The primary advantage of DuPont analysis is the fuller picture of a company’s overall financial health and performance that it provides, compared

What are some strategies companies commonly use to reduce their debt to capital ratio?

July 7, 2024 No Comments

A: Companies can take steps to reduce and improve their debt to capital ratios. Among the strategies that can be employed are increasing sales profitability, better management of inventory and restructuring debt. The debt to capital ratio is a financial leverage ratio, similar to the

What are some ways a company can improve on its Return on Capital Employed (ROCE)?

July 7, 2024 No Comments

A: Options available to a company seeking to improve on its return on capital employed (ROCE) ratio include reducing costs, increasing sales, and paying off debt or restructuring financing. ROCE is a metric that measures the profitability of a company. It helps analysts assess how

What are some ways to make a distribution channel more efficient?

July 7, 2024 No Comments

A: While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency of a distribution channel are increasing or carefully picking the channel intermediaries, increasing the focus on supply chain management or consolidating the various distribution

What are some examples of horizontal integration?

July 7, 2024 No Comments

A: One of the clearest examples of horizontal integration is Facebook’s acquisition of Instagram in 2012 for a reported $1 billion. Both Facebook and Instagram operated in the same industry and were in similar production stages in regard to their photo-sharing services. Facebook, looking to

What are some examples of industries that cannot claim cost of goods sold (COGS)?

July 7, 2024 No Comments

A: Generally speaking, the Internal Revenue Service, or IRS, allows you to deduct the cost of goods that you either make or purchase to sell or resell for your business. For accounting and tax purposes, these are listed under the entry title cost of goods

What are some examples of items that count as comprehensive income?

July 7, 2024 No Comments

A: In business accounting, other comprehensive income, or OCI, includes those revenues, expenses, gains and losses that have not yet been realized. A basic example is a portfolio of bonds that have not yet been sold. Gains or losses from changing value of the bonds

What are some examples of just in time (JIT) inventory processes?

July 7, 2024 No Comments

A: Examples of just in time, or JIT, inventory processes are found in automobile manufacturing, drop shipping retailers, fast food restaurant production and on-demand publishing. The JIT inventory system was popularized by Toyota Motor Company in the 1970s. It is an alternative to the more

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