The records of Everyday Electronics Corporation for a particular period include the following: $\begin{array}{lr} \text { Average total assets } & \$ 760,000 \\ \text { Average total liabilities } & 485,000 \\ \text { Total revenue } & 200,500 \\ \text { Total expenses (including income tax) } & 135,000 \end{array}$ The return on equity ratio is closest to:

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

The records of Marshall Company include the following: \[\begin{array} { l r } \text { Average total assets } & \$ 3,500,000 \\ \text { Average total liabilities } & 1,220,000 \\ \text { Total revenue } & 4,580,000 \\ \text { Total expense (including income tax) } & 4,100,000 \\ \text { Interest expense (included in total expenses) } & 90,000 \\ \text { Income tax rate } 40 \% & \end{array}\] The return on assets is closest to:

A) 14.9%. B) 18.3%. C) 15.3%. D) 14.7%. A) 14.9%. B) 18.3%. C) 15.3%. D) 14.7%.

Agnes Company reported the following data: \[\begin{array} { l r } \text { Quick assets } & \$ 55,000 \\ \text { Current assets } & 150,000 \\ \text { Total liabilities } & 300,000 \\ \text { Average net receivables } & 12,600 \\ \text { Beginning inventory } & 38,000 \\ \text { Long-term liabilities } & 200,000 \\ \text { Net credit sales } & 126,000 \\ \text { Cost of goods sold } & 84,000 \\ \text { Ending inventory } & 46,000 \end{array}\] What was the current ratio?

A) 0.5 B) 1.5 C) 2.5 D) 0.75 A) 0.5 B) 1.5 C) 2.5 D) 0.75

Potaw Company reported the following data at the end of 2014: $\begin{array}{lr}\text { Sales revenue ( } 75 \% \text { on credit) }&\$300,000\\ \text { Expenses ( } 26 \% \text { on credit) }&60,000\\ \text { Accounts receivable, net at December } 31,2014 \text { (a decrease }\\ \text { of } \$ 4,000 \text { during 2014) } & 8,000 \\ \text { Total assets } & 200,000 \\ \text { Stockholders' equity } & 150,000 \end{array}$ The average number of days to collect receivables during 2014 is closest to:

A) 16.2. B) 14.3. C) 36.5. D) 21.9. A) 16.2. B) 14.3. C) 36.5. D) 21.9.

Indicate the effect of each item on the particular ratio of that row of the schedule. In the last column of the schedule, place the answer of the effect of the item on the ratio. Use the letter I for increase in the ratio, D for decrease in the ratio, and N for no effect on the ratio. Each item is independent of the others. \(\begin{array}{|l|l|l|l|c|} \hline\text { Ratio }&&\text { Ratio Value } & \text { Item } &I,D,or,N\\ &&\text { Before the } & \\ &&\text { Item Occurred } & \\ \hline \text { A. } & \text { Current ratio } & 3.0 & \begin{array}{l} \text { Borrowed money by issuing bonds } \\ \text { that mature at the end of } 15 \text { years. } \end{array} & \\ \hline \text { B. } & \text { Quick } & 1.0 & \begin{array}{l} \text { Returned damaged inventory to the } \\ \text { supplier. The goods were not yet } \\ \text { paid for. } \end{array} & \\ \hline \text { C. } & \begin{array}{l} \text { Receivable } \\ \text { turnover } \end{array} & \begin{array}{c} 12 \text { times per } \\ \text { year } \end{array} & \begin{array}{l} \text { At the beginning of the current year } \\ \text { sales terms were changed from } \\ \text { terms of "net due in } 30 \text { days" to } \\ \text { "net due in } 60 \text { days" } \end{array} & \\ \hline \text { D. } & \begin{array}{l} \text { Earnings per } \\ \text { share } \end{array} & \$ 2.00 & \text { Issued a } 50 \% \text { stock dividend. } & \\ \hline \text { E. } & \text { Current ratio } & 4.0 & \begin{array}{l} \text { Sold a short-term investment at a } \\ \text { gain. } \end{array} & \\ \hline \text { F. } & \begin{array}{l} \text { Fixed asset } \\ \text { turnover } \end{array} & 1.4 & \text { Sold a building at a loss. } & \\ \hline \text { G. } & \text { Profit margin } & .25 & \begin{array}{l} \text { A customer returned goods and } \\ \text { received a } \$ 1,000 \text { credit on account. } \\ \text { The goods had been sold at a } 30 \% \\ \text { gross profit percentage. } \end{array} & \\ \hline \end{array}\)

@#IMG-DLM& A. Cash increases the numerator of curr

Exam 13: Analyzing Financial Statements

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 What was Lee's times interest earned ratio?

(Multiple Choice)

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Question 61

When considering an investment, which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

(Multiple Choice)

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Question 62

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

(True/False)

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Question 63

Which of the following statements is correct?

(Multiple Choice)

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Question 64

Which of the following is false?

(Multiple Choice)

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Question 65

The records of Everyday Electronics Corporation for a particular period include the following: Average total assets \ 760,000 Average total liabilities 485,000 Total revenue 200,500 Total expenses (including income tax) 135,000 The return on equity ratio is closest to:

(Multiple Choice)

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Question 66

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

(Multiple Choice)

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Question 67

Which of the following ratios increases when a company switches from FIFO to LIFO during a period of increasing unit costs?

(Multiple Choice)

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Question 68

Which of the following is correct?

(Multiple Choice)

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Question 69

Longhorn Company reported the following data at year-end: Total stockholders' equity \ 200,000 Current liabilities 75,000 Total assets 350,000 Current assets 80,000 Common stock (par \ 10) 125,000 Required: Calculate each of the following ratios. Round your answers to two decimal places. A. Debt-to-equity ratio B. Current ratio

(Essay)

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Question 70

Cecilia Company reported net income of $1,200,000. The average total liabilities were $4,300,000 and average total stockholders' equity was $5,200,000. Interest expense was $100,000 and the tax rate was 40%. Cecilia's return on assets ratio is closest to:

(Multiple Choice)

4.9/5

(86)

Question 71

The records of Marshall Company include the following: Average total assets \ 3,500,000 Average total liabilities 1,220,000 Total revenue 4,580,000 Total expense (including income tax) 4,100,000 Interest expense (included in total expenses) 90,000 Income tax rate 40\% The return on assets is closest to:

(Multiple Choice)

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Question 72

The year-end adjusting entry to record bad debt expense will increase which of the following ratios?

(Multiple Choice)

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Question 73

Agnes Company reported the following data: Quick assets \ 55,000 Current assets 150,000 Total liabilities 300,000 Average net receivables 12,600 Beginning inventory 38,000 Long-term liabilities 200,000 Net credit sales 126,000 Cost of goods sold 84,000 Ending inventory 46,000 What was the current ratio?

(Multiple Choice)

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Question 74

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

(Multiple Choice)

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Question 75

Potaw Company reported the following data at the end of 2014: Sales revenue ( 75\% on credit) \3 00,000 Expenses ( 26\% on credit) 60,000 Accounts receivable, net at December 31,2014 (a decrease of \ 4,000 during 2014) 8,000 Total assets 200,000 Stockholders' equity 150,000 The average number of days to collect receivables during 2014 is closest to:

(Multiple Choice)

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Question 76

Which of the accounting ratios considers the importance of cash flows relating to required interest payments?

(Multiple Choice)

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Question 77

The profit margin ratio considers the asset base utilized to earn income.

(True/False)

5.0/5

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Question 78

Indicate the effect of each item on the particular ratio of that row of the schedule. In the last column of the schedule, place the answer of the effect of the item on the ratio. Use the letter I for increase in the ratio, D for decrease in the ratio, and N for no effect on the ratio. Each item is independent of the others. Ratio Ratio Value Item I,D,or,N Before the Item Occurred A. Current ratio 3.0 Borrowed money by issuing bonds that mature at the end of 15 years. B. Quick 1.0 Returned damaged inventory to the supplier. The goods were not yet paid for. C. Receivable turnover 12 times per year At the beginning of the current year sales terms were changed from terms of "net due in 30 days" to "net due in 60 days" D. Earnings per share \ 2.00 Issued a 50\% stock dividend. E. Current ratio 4.0 Sold a short-term investment at a gain. F. Fixed asset turnover 1.4 Sold a building at a loss. G. Profit margin .25 A customer returned goods and received a \ 1,000 credit on account. The goods had been sold at a 30\% gross profit percentage.

(Essay)

4.8/5

(86)

Question 79

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:

(Multiple Choice)

4.9/5

(83)

Question 80

When considering an investment, which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment?

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

Which of the following statements is correct?

Which of the following is false?

The records of Everyday Electronics Corporation for a particular period include the following: Average total assets \ 760,000 Average total liabilities 485,000 Total revenue 200,500 Total expenses (including income tax) 135,000 The return on equity ratio is closest to:

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

Which of the following ratios increases when a company switches from FIFO to LIFO during a period of increasing unit costs?

Which of the following is correct?

Cecilia Company reported net income of $1,200,000. The average total liabilities were $4,300,000 and average total stockholders' equity was $5,200,000. Interest expense was $100,000 and the tax rate was 40%. Cecilia's return on assets ratio is closest to:

The year-end adjusting entry to record bad debt expense will increase which of the following ratios?

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

Which of the accounting ratios considers the importance of cash flows relating to required interest payments?

The profit margin ratio considers the asset base utilized to earn income.

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 Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

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