Question 1

Purchasing treasury stock increases the return on equity ratio.

Accepted Answer

A) True 
 B)False

Question 2

Both the gross profit percentage and the net profit margin use net sales revenue in the denominator.

Accepted Answer

A) True 
 B)False

Question 3

The fixed asset turnover ratio increases when net income increases.

Accepted Answer

A) True 
 B)False

Question 4

Which ratio reflects the stock market's assessment of a company's future performance?

Accepted Answer

A) Price/earnings ratio. 
B) Dividend yield ratio. 
C) Fixed asset turnover ratio. 
D) Cash coverage ratio. 
A) Price/earnings ratio. 
B) Dividend yield ratio. 
C) Fixed asset turnover ratio. 
D) Cash coverage ratio.

Question 5

If the current ratio is 2,what will be the effect of the payment of a cash dividend,which was recorded as a liability on the date of declaration?

Accepted Answer

A) An increase in the current ratio. 
B) A decrease in the current ratio. 
C) No effect on the current ratio. 
D) A decrease in the cash coverage ratio. 
A) An increase in the current ratio. 
B) A decrease in the current ratio. 
C) No effect on the current ratio. 
D) A decrease in the cash coverage ratio.

Question 6

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
-
Using the modified method discussed in the text,what was Lee's cash coverage ratio?

Accepted Answer

A) 39.0 
B) 20.0 
C) 19.8 
D) 39.6 
A) 39.0 
B) 20.0 
C) 19.8 
D) 39.6

Question 7

Which of the following transactions decreases earnings per share?

Accepted Answer

A) Collection of an account receivable. 
B) Selling treasury stock for an amount less than its cost. 
C) A decrease in the market value per share. 
D) Paying cash in advance for rent. 
A) Collection of an account receivable. 
B) Selling treasury stock for an amount less than its cost. 
C) A decrease in the market value per share. 
D) Paying cash in advance for rent.

Question 8

Return on equity (ROE)by the DuPont model is a function of three ratios: net profit margin,return on assets,and financial leverage.

Accepted Answer

A) True 
 B)False

Question 9

Baron Company reported the following data:   
-The current ratio is closest to:

Accepted Answer

A) 5.0 
B) 4.92 
C) 4.86 
D) 1.67 
A) 5.0 
B) 4.92 
C) 4.86 
D) 1.67

Question 10

The cash payment of a previously declared dividend increases which of the following ratios?

Accepted Answer

A) Debt-to-equity. 
B) Earnings per share. 
C) Price/earnings ratio. 
D) Total asset turnover. 
A) Debt-to-equity. 
B) Earnings per share. 
C) Price/earnings ratio. 
D) Total asset turnover.

Question 11

The return on assets ratio is influenced significantly by a company's relative debt and equity financing of its assets.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following transactions decreases earnings per share?

Accepted Answer

A) Declaring cash dividends payable to the common stockholders. 
B) Purchasing treasury stock. 
C) The accrual of revenue. 
D) Declaring and distributing a 10% common stock dividend. 
A) Declaring cash dividends payable to the common stockholders. 
B) Purchasing treasury stock. 
C) The accrual of revenue. 
D) Declaring and distributing a 10% common stock dividend.

Question 13

Which of the following statements is correct?

Accepted Answer

A) Selling inventory at its cost does not affect the net profit margin ratio. 
B) Accruing sales revenue does not affect the net profit margin ratio. 
C) The total asset turnover ratio increases when fixed assets are sold at a loss. 
D) The net profit margin ratio decreases when common stock is issued. 
A) Selling inventory at its cost does not affect the net profit margin ratio. 
B) Accruing sales revenue does not affect the net profit margin ratio. 
C) The total asset turnover ratio increases when fixed assets are sold at a loss. 
D) The net profit margin ratio decreases when common stock is issued.

Question 14

Baron Company reported the following data:  
- The quick ratio is closest to:

Accepted Answer

A) 3.57 
B) 1.67 
C) 1.19 
D) 1.14 
A) 3.57 
B) 1.67 
C) 1.19 
D) 1.14

Question 15

Thomas Company had income before interest and taxes of $120,000.Interest expense for the period was $17,000 and income taxes amounted to $28,500.The average stockholders' equity was $680,000.Thomas' return on equity (ROE)is closest to:

Accepted Answer

A) 17.65% 
B) 15.15% 
C) 13.46% 
D) 10.96% 
A) 17.65% 
B) 15.15% 
C) 13.46% 
D) 10.96%

Question 16

Polk Corporation reported the following information related to its common stock (par $10)outstanding and net income:
   Calculate each of the following ratios.Round your answers to two decimal places.
A.Price/earnings ratio
B.Dividend yield

Accepted Answer

A.$40 ÷ [($35,000)÷

Question 17

The records of Everyday Electronics Corporation for a particular period include the following:   The return on equity ratio is closest to:

Accepted Answer

A) 13.2% 
B) 23.8% 
C) 24.0% 
D) 8.4% 
A) 13.2% 
B) 23.8% 
C) 24.0% 
D) 8.4%

Question 18

MNF Corporation gathered the following data at the end of the accounting period,December 31,2019:
   Part 1: Calculate each of the following ratios:
A.Net profit margin
B.Return on equity
C.Earnings per share
D.Dividend yield ratio
E.Price/earnings ratio
F.Return on assets

Accepted Answer

Part 1:
A.Net profit margin $60,000 ÷ $1

Question 19

Which of the following is false?

Accepted Answer

A) The cash ratio is the least stringent but most reliable test of liquidity. 
B) A company with a high level of inventory will have a quick ratio significantly lower than its current ratio. 
C) A current ratio that is too high could indicate funds tied up in inventory and other working capital assets. 
D) Analysts consider a current ratio of 2 to be financially conservative. 
A) The cash ratio is the least stringent but most reliable test of liquidity. 
B) A company with a high level of inventory will have a quick ratio significantly lower than its current ratio. 
C) A current ratio that is too high could indicate funds tied up in inventory and other working capital assets. 
D) Analysts consider a current ratio of 2 to be financially conservative.

Question 20

Which of the following is correct?

Accepted Answer

A) The times interest earned ratio is considered a better test of the ability to cover interest charges than the cash coverage ratio. 
B) The debt-to-equity ratio shows the relative proportion of total assets financed by debt. 
C) The higher the debt-to-equity ratio,the higher the potential return to the stockholders,but also the higher risk to stockholders. 
D) The cash coverage ratio compares the cash generated by a company to its cash obligations for the prior period. 
A) The times interest earned ratio is considered a better test of the ability to cover interest charges than the cash coverage ratio. 
B) The debt-to-equity ratio shows the relative proportion of total assets financed by debt. 
C) The higher the debt-to-equity ratio,the higher the potential return to the stockholders,but also the higher risk to stockholders. 
D) The cash coverage ratio compares the cash generated by a company to its cash obligations for the prior period.

Purchasing treasury stock increases the return on equity ratio.

Both the gross profit percentage and the net profit margin use net sales revenue in the denominator.

The fixed asset turnover ratio increases when net income increases.

Which ratio reflects the stock market's assessment of a company's future performance?

If the current ratio is 2,what will be the effect of the payment of a cash dividend,which was recorded as a liability on the date of declaration?

Which of the following transactions decreases earnings per share?

Return on equity (ROE)by the DuPont model is a function of three ratios: net profit margin,return on assets,and financial leverage.

Baron Company reported the following data: -The current ratio is closest to:

The cash payment of a previously declared dividend increases which of the following ratios?

The return on assets ratio is influenced significantly by a company's relative debt and equity financing of its assets.

Which of the following transactions decreases earnings per share?

Which of the following statements is correct?

Baron Company reported the following data: - The quick ratio is closest to:

Thomas Company had income before interest and taxes of $120,000.Interest expense for the period was $17,000 and income taxes amounted to $28,500.The average stockholders' equity was $680,000.Thomas' return on equity (ROE)is closest to:

Polk Corporation reported the following information related to its common stock (par $10)outstanding and net income: Calculate each of the following ratios.Round your answers to two decimal places. A.Price/earnings ratio B.Dividend yield

The records of Everyday Electronics Corporation for a particular period include the following: The return on equity ratio is closest to:

MNF Corporation gathered the following data at the end of the accounting period,December 31,2019: Part 1: Calculate each of the following ratios: A.Net profit margin B.Return on equity C.Earnings per share D.Dividend yield ratio E.Price/earnings ratio F.Return on assets

Which of the following is false?

Which of the following is correct?

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

Exam 13: Analyzing Financial Statements

Purchasing treasury stock increases the return on equity ratio.

Both the gross profit percentage and the net profit margin use net sales revenue in the denominator.

The fixed asset turnover ratio increases when net income increases.

Which ratio reflects the stock market's assessment of a company's future performance?

If the current ratio is 2,what will be the effect of the payment of a cash dividend,which was recorded as a liability on the date of declaration?

Which of the following transactions decreases earnings per share?

Return on equity (ROE)by the DuPont model is a function of three ratios: net profit margin,return on assets,and financial leverage.

Baron Company reported the following data: -The current ratio is closest to:

The cash payment of a previously declared dividend increases which of the following ratios?

The return on assets ratio is influenced significantly by a company's relative debt and equity financing of its assets.

Which of the following transactions decreases earnings per share?

Which of the following statements is correct?

Baron Company reported the following data: - The quick ratio is closest to:

Thomas Company had income before interest and taxes of $120,000.Interest expense for the period was $17,000 and income taxes amounted to $28,500.The average stockholders' equity was $680,000.Thomas' return on equity (ROE)is closest to:

Polk Corporation reported the following information related to its common stock (par $10)outstanding and net income: Calculate each of the following ratios.Round your answers to two decimal places. A.Price/earnings ratio B.Dividend yield

The records of Everyday Electronics Corporation for a particular period include the following: The return on equity ratio is closest to:

MNF Corporation gathered the following data at the end of the accounting period,December 31,2019: Part 1: Calculate each of the following ratios: A.Net profit margin B.Return on equity C.Earnings per share D.Dividend yield ratio E.Price/earnings ratio F.Return on assets

Which of the following is false?

Which of the following is correct?

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