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Accounting Case-Alternatives With Strengths And Weaknesses
Essay specific features
Written by:
James R
Date added:
January 12, 2015
Level:
University
Grade:
A
No of pages / words:
4 / 879
Was viewed:
3732 times
Rating of current essay:
Essay content:
This would mean we would have produced the order and be able to receive payment for the order a day early without having incurred any overtime.
Weaknesses of Action #1: If the materials are purchased on Wednesday, we would have to write a check. That means the cash flow from operating activities for this year will be much lower, which our stockholders won’t like...
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Also, our acid test ratio will go down from 1.01:1 to .90:1, so our creditors may be upset.
Proposed Alternative Action #2: Order the raw materials on the following Tuesday and work overtime to complete the order.
Strengths of Action #2: The purchase of the raw materials would not affect our acid-test ratio for the current year, so our creditors would not be upset with us...
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