Explain. PROBLEM 14.8A Ratios; Consider Advisability of Incurring Long-Term Debt LO14-5, LO14-7 ...
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Accounting
Explain.
PROBLEM A Ratios; Consider Advisability of Incurring LongTerm Debt LO LO
At the end of the year, the following information was obtained from the accounting records of Harrison Electronics, Inc.:
Sales all on credit
$
Instructions
a From the information given, compute the following:
Inventory turnover
Accounts receivable turnover
Total operating expenses
Gross profit percent
Return on average stockholders' equity
Return on average Tassets
b Harrison Electronics has an opportunity to obtain a longterm loan at an annual interest rate of percent and could use this additional capital at the same rate of profitability as indicated by the given data. Would obtaining the loan be desirable from the viewpoint of the stockholders? Explain.
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