Question 1

Which of the following transactions will not increase the cash ratio?

Accepted Answer

A) Receiving cash from a common stock issue. 
B) Refinancing a current liability with long-term debt. 
C) Using cash to purchase a two-month treasury bill. 
D) Collecting an account receivable. 
A) Receiving cash from a common stock issue. 
B) Refinancing a current liability with long-term debt. 
C) Using cash to purchase a two-month treasury bill. 
D) Collecting an account receivable. C

Question 2

The records of Marshall Company include the following:   
-The return on assets (calculated using the modified method discussed in the text)is closest to:

Accepted Answer

A) 14.9% 
B) 18.3% 
C) 15.3% 
D) 18.7% 
A) 14.9% 
B) 18.3% 
C) 15.3% 
D) 18.7% C

Question 3

Home Depot's operating strategy is to offer a broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable service-oriented personnel and aggressive advertising.Which of the following is not as critical to achieving Home Depot's strategy?

Accepted Answer

A) Cost control 
B) Product differentiation 
C) High level of customer service 
D) High sales volume 
A) Cost control 
B) Product differentiation 
C) High level of customer service 
D) High sales volume B

Question 4

The journal entry to record depreciation expense decreases which of the following ratios?

Accepted Answer

A) Debt-to-equity. 
B) Earnings per share. 
C) Fixed asset turnover. 
D) Quality of income. 
A) Debt-to-equity. 
B) Earnings per share. 
C) Fixed asset turnover. 
D) Quality of income.

Question 5

Lee Company has provided the following information: • Cash flow from operating activities,$240,000
• Net income,$204,000
• Interest expense,$20,000
• Interest cash payments,$10,000
• Income tax payments,$140,000
• Income tax expense,$136,000
-
Lee's quality of income ratio is closest to:

Accepted Answer

A) 1.18 
B) 0.85 
C) 1.76 
D) 0.74 
A) 1.18 
B) 0.85 
C) 1.76 
D) 0.74

Question 6

Which of the following statements is correct?

Accepted Answer

A) A ratio calculation is most relevant in isolation. 
B) One of the advantages of ratio analysis is that it allows companies of different sizes to be compared. 
C) Finding benchmarks for comparison is a straightforward task. 
D) It is always preferable to compare a company's performance to industry-wide ratios rather than to use a competitor's ratios. 
A) A ratio calculation is most relevant in isolation. 
B) One of the advantages of ratio analysis is that it allows companies of different sizes to be compared. 
C) Finding benchmarks for comparison is a straightforward task. 
D) It is always preferable to compare a company's performance to industry-wide ratios rather than to use a competitor's ratios.

Question 7

The cash ratio measures how much cash is on hand to cover current liabilities.

Accepted Answer

A) True 
 B)False

Question 8

Finding comparable companies in order to compare performance is often difficult since no two companies have identical products,markets,and operating strategies.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following ratios increases when inventory is sold on account for a price equal to its original cost?

Accepted Answer

A) Current. 
B) Quick. 
C) Return on assets. 
D) Return on equity. 
A) Current. 
B) Quick. 
C) Return on assets. 
D) Return on equity.

Question 10

Which of the following transactions will increase a current ratio,which is currently 2.5?

Accepted Answer

A) Receiving cash from signing a 6-month note payable. 
B) Accruing an expense. 
C) Using cash to pay an account payable. 
D) Collecting an account receivable. 
A) Receiving cash from signing a 6-month note payable. 
B) Accruing an expense. 
C) Using cash to pay an account payable. 
D) Collecting an account receivable.

Question 11

During 2019,Home Style's cost of goods sold percentage was 68.2%,and selling and store operating costs were 19.3% of sales.During 2018,Home Style's cost of goods sold percentage was 70.1% while selling and store operating costs were 19.0% of sales.What effect would the change in these percentages have on 2019's gross profit percentage and net profit margin percentage?

Accepted Answer

A) The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would decrease both the gross profit and net profit margin percentages. 
B) The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would increase both the gross profit and net profit margin percentages. 
C) The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would decrease only the net profit margin percentage. 
D) The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would increase only the net profit margin percentage. 
A) The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would decrease both the gross profit and net profit margin percentages. 
B) The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would increase both the gross profit and net profit margin percentages. 
C) The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would decrease only the net profit margin percentage. 
D) The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages,but the increase in the selling and store operating costs percentage would increase only the net profit margin percentage.

Question 12

MusicPod's earnings per share ratios were $2.47 and $2.07 respectively for 2019 and 2018.MusicPod's stock was trading at $53.00 and $41.50 per share at the end of 2019 and 2018 respectively.The company paid cash dividends per share of $0.85 in 2019 and $0.63 in 2018.Total stockholders' equity was $13,572 million and $11,896 million in 2019 and 2018 respectively.The common shares outstanding were approximately 1,782,000 in both 2019 and 2018. 
-MusicPod's dividend yield ratio for 2019 is closest to:

Accepted Answer

A) 34.4% 
B) 1.4% 
C) 30.4% 
D) 1.6% 
A) 34.4% 
B) 1.4% 
C) 30.4% 
D) 1.6%

Question 13

The dividend yield ratio decreases when earnings per share increases.

Accepted Answer

A) True 
 B)False

Question 14

The cash coverage ratio measures a firm's ability to pay its current liabilities with its cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 15

The following data were reported for Favre Company:
   Calculate each of the following ratios.Round your answers to two decimal places.
A.Dividend yield
B.Price/earnings ratio
C.Quality of income

Accepted Answer

A.Dividend yield = 3.0% = .60

Question 16

The 2019 financial statements of Companies Y and Z showed the following:
   Part A: For each company,calculate the items listed in the following tabulation.
   Part B: Assuming both Company Y and Company Z are in the same industry,which company (Y or Z)appears to be the better investment and why?

Accepted Answer

@#IMG-DLM& Part B: Company Y appears to be a bette

Question 17

Which of the following is not a ratio included in analysis of the operating cycle?

Accepted Answer

A) Days to collect receivables. 
B) Days to sell inventory. 
C) Days to pay payables. 
D) Days sales in inventory. 
A) Days to collect receivables. 
B) Days to sell inventory. 
C) Days to pay payables. 
D) Days sales in inventory.

Question 18

The following data were available for Holiday Company:
Sales revenue,$225,000 (including $75,000 cash sales)
Cost of goods sold,$175,000
Average balance in inventory,$20,000
Average balance in accounts receivable,$20,000
Assume 365 days in the year
Calculate each of the following ratios.Round your answers to two decimal places.
A.Inventory turnover ratio
B.Average days to sell inventory
C.Receivable turnover ratio
D.Average days to collect receivables

Accepted Answer

A.Inventory turnover ratio = $175,000 ÷

Question 19

Potaw Company reported the following data at the end of 2019:  
- What was the accounts receivable turnover ratio?

Accepted Answer

A) 30.0 
B) 37.5 
C) 36.5 
D) 22.5 
A) 30.0 
B) 37.5 
C) 36.5 
D) 22.5

Question 20

Which of the following ratios is not an indicator of a company's short-term financial strength?

Accepted Answer

A) Quality of income. 
B) Current ratio. 
C) Cash ratio. 
D) Quick ratio. 
A) Quality of income. 
B) Current ratio. 
C) Cash ratio. 
D) Quick ratio.

Which of the following transactions will not increase the cash ratio?

The records of Marshall Company include the following: -The return on assets (calculated using the modified method discussed in the text)is closest to:

Home Depot's operating strategy is to offer a broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable service-oriented personnel and aggressive advertising.Which of the following is not as critical to achieving Home Depot's strategy?

The journal entry to record depreciation expense decreases which of the following ratios?

Lee Company has provided the following information: • Cash flow from operating activities,$240,000 • Net income,$204,000 • Interest expense,$20,000 • Interest cash payments,$10,000 • Income tax payments,$140,000 • Income tax expense,$136,000 - Lee's quality of income ratio is closest to:

Which of the following statements is correct?

The cash ratio measures how much cash is on hand to cover current liabilities.

Finding comparable companies in order to compare performance is often difficult since no two companies have identical products,markets,and operating strategies.

Which of the following ratios increases when inventory is sold on account for a price equal to its original cost?

Which of the following transactions will increase a current ratio,which is currently 2.5?

The dividend yield ratio decreases when earnings per share increases.

The cash coverage ratio measures a firm's ability to pay its current liabilities with its cash flows from operating activities.

The following data were reported for Favre Company: Calculate each of the following ratios.Round your answers to two decimal places. A.Dividend yield B.Price/earnings ratio C.Quality of income

The 2019 financial statements of Companies Y and Z showed the following: Part A: For each company,calculate the items listed in the following tabulation. Part B: Assuming both Company Y and Company Z are in the same industry,which company (Y or Z)appears to be the better investment and why?

Which of the following is not a ratio included in analysis of the operating cycle?

Potaw Company reported the following data at the end of 2019: - What was the accounts receivable turnover ratio?

Which of the following ratios is not an indicator of a company's short-term financial strength?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

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Exam 13: Analyzing Financial Statements

Which of the following transactions will not increase the cash ratio?

The records of Marshall Company include the following: -The return on assets (calculated using the modified method discussed in the text)is closest to:

Home Depot's operating strategy is to offer a broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable service-oriented personnel and aggressive advertising.Which of the following is not as critical to achieving Home Depot's strategy?

The journal entry to record depreciation expense decreases which of the following ratios?

Which of the following statements is correct?

The cash ratio measures how much cash is on hand to cover current liabilities.

Finding comparable companies in order to compare performance is often difficult since no two companies have identical products,markets,and operating strategies.

Which of the following ratios increases when inventory is sold on account for a price equal to its original cost?

Which of the following transactions will increase a current ratio,which is currently 2.5?

The dividend yield ratio decreases when earnings per share increases.

The cash coverage ratio measures a firm's ability to pay its current liabilities with its cash flows from operating activities.

The following data were reported for Favre Company: Calculate each of the following ratios.Round your answers to two decimal places. A.Dividend yield B.Price/earnings ratio C.Quality of income

The 2019 financial statements of Companies Y and Z showed the following: Part A: For each company,calculate the items listed in the following tabulation. Part B: Assuming both Company Y and Company Z are in the same industry,which company (Y or Z)appears to be the better investment and why?

Which of the following is not a ratio included in analysis of the operating cycle?

Potaw Company reported the following data at the end of 2019: - What was the accounts receivable turnover ratio?

Which of the following ratios is not an indicator of a company's short-term financial strength?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

Filters