Reference no: EM132934420
Problem 1: The formula for return on investment is the net income divided by the assets. This financial ratio indicates to the management of the businesses:
1- That the Balance Sheet is unbalanced with the Income Statement, the higher the value of the investment return ratio.
2- That the net income is equal to the total assets of the company
3- The profitability of the company
4- The need for the management of the company to increase its debt, selling long-term assets
Problem 2: The bad debt allocation method is:
1- A calculation that is used to estimate how much credit is considered to be obtained from customers who represent a greater risk
2- An estimate of the funds that will not be paid by clients on their pending accounts
3- Based on international accounting laws, adopted in the United States in 2001
4- More successful than the direct method of canceling accounts