Question 1

When evaluating its net profit margin for the current year, Coca Cola would most likely use all of the following benchmarks except:

Accepted Answer

A)  Anheuser Busch's net profit margin. 
B)  the Fortune 500's net profit margin. 
C)  Pepsico's net profit margin. 
D)  the average net profit margin for the soft drink manufacturing industry. 
A)  Anheuser Busch's net profit margin. 
B)  the Fortune 500's net profit margin. 
C)  Pepsico's net profit margin. 
D)  the average net profit margin for the soft drink manufacturing industry.

Question 2

Which of the following ratios is calculated by dividing net income by revenues?

Accepted Answer

A)  Return on equity ratio 
B)  Net profit margin ratio 
C)  Current ratio 
D)  Fixed asset turnover ratio 
A)  Return on equity ratio 
B)  Net profit margin ratio 
C)  Current ratio 
D)  Fixed asset turnover ratio

Question 3

In a common size income statement, each item on the income statement is expressed as a percentage of:

Accepted Answer

A)  net income. 
B)  gross profit. 
C)  total expenses. 
D)  sales revenue. 
A)  net income. 
B)  gross profit. 
C)  total expenses. 
D)  sales revenue.

Question 4

A company has a debt-to-assets ratio of 0.45. If the company then borrows cash from the bank to finance a building acquisition, which of the following is a correct statement?

Accepted Answer

A)  The debt-to-assets ratio will be unchanged. 
B)  The debt-to-assets ratio will increase. 
C)  The debt-to-assets ratio will decrease. 
D)  The debt-to-assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition. 
A)  The debt-to-assets ratio will be unchanged. 
B)  The debt-to-assets ratio will increase. 
C)  The debt-to-assets ratio will decrease. 
D)  The debt-to-assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition.

Question 5

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover

Accepted Answer

A) True 
 B)False

Question 6

Company X has net sales revenue of $780,000, cost of goods sold of $343,200, and all other expenses of $327,600. The net profit margin is closest to:

Accepted Answer

A)  0.32. 
B)  0.56. 
C)  0.86. 
D)  0.14. 
A)  0.32. 
B)  0.56. 
C)  0.86. 
D)  0.14.

Question 7

The ratio that measures the company's ability to meet required interest payments is the:

Accepted Answer

A)  debt-to-equity ratio. 
B)  current ratio. 
C)  Price/Earnings ratio. 
D)  times interest earned ratio. 
A)  debt-to-equity ratio. 
B)  current ratio. 
C)  Price/Earnings ratio. 
D)  times interest earned ratio.

Question 8

Which of the following measures would assist in assessing the profitability of a company?

Accepted Answer

A)  Debt-to-assets ratio 
B)  Fixed asset turnover ratio 
C)  Receivables turnover ratio 
D)  Current ratio 
A)  Debt-to-assets ratio 
B)  Fixed asset turnover ratio 
C)  Receivables turnover ratio 
D)  Current ratio

Question 9

The going-concern assumption states that the:

Accepted Answer

A)  company will always maximize the profit for stockholders. 
B)  company is not expected to go out of business in the near future. 
C)  company is a separate concern from the stockholders. 
D)  company's results will be reported in a consistent manner from period to perioD.
The going-concern (also called the continuity) assumption means that a business is assumed to be capable of continuing its operations long enough to meet its obligations. 
A)  company will always maximize the profit for stockholders. 
B)  company is not expected to go out of business in the near future. 
C)  company is a separate concern from the stockholders. 
D)  company's results will be reported in a consistent manner from period to perioD.
The going-concern (also called the continuity) assumption means that a business is assumed to be capable of continuing its operations long enough to meet its obligations.

Question 10

Which of the following is not a profitability ratio?

Accepted Answer

A)  Return on equity (RO
E)  
B)  Earnings per share 
C)  Fixed asset turnover 
D)  Days to sell 
A)  Return on equity (RO
E)  
B)  Earnings per share 
C)  Fixed asset turnover 
D)  Days to sell

Question 11

Cost of goods sold divided by average inventory is the calculation for which of the following ratios?

Accepted Answer

A)  Net profit margin ratio 
B)  Current ratio 
C)  Inventory turnover ratio 
D)  Fixed asset turnover ratio 
A)  Net profit margin ratio 
B)  Current ratio 
C)  Inventory turnover ratio 
D)  Fixed asset turnover ratio

Question 12

If net income is rising, but net sales revenue and the gross profit percentage remain the same, then:

Accepted Answer

A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising. 
A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising.

Question 13

Which of the following is a profitability measure?

Accepted Answer

A)  Net income ÷ Revenues 
B)  Total assets ÷ Total stockholders' equity 
C)  Total liabilities ÷ Total stockholders' equity 
D)  Cost of goods sold ÷ Average inventory 
A)  Net income ÷ Revenues 
B)  Total assets ÷ Total stockholders' equity 
C)  Total liabilities ÷ Total stockholders' equity 
D)  Cost of goods sold ÷ Average inventory

Question 14

During the current accounting period, revenue from credit sales is $671,000. The Accounts Receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period. Which of the following statements is correct?

Accepted Answer

A)  The receivables turnover ratio is 12.9. 
B)  On average, it takes 12.9 days to collect payment from credit customers. 
C)  The receivables turnover ratio is 28.3. 
D)  On average, the company sells its inventory every 28.3 days. 
A)  The receivables turnover ratio is 12.9. 
B)  On average, it takes 12.9 days to collect payment from credit customers. 
C)  The receivables turnover ratio is 28.3. 
D)  On average, the company sells its inventory every 28.3 days.

Question 15

Company X has net sales revenue of $1,250,000, cost of goods sold of $760,000, and all other expenses of $290,000. The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000. The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000. The fixed asset turnover ratio is closest to:

Accepted Answer

A)  0.53. 
B)  2.50. 
C)  3.33. 
D)  0.80. 
A)  0.53. 
B)  2.50. 
C)  3.33. 
D)  0.80.

Question 16

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Accepted Answer

A)  Inventory turnover 
B)  Current ratio 
C)  Days to collect ratio 
D)  Days to sell ratio 
A)  Inventory turnover 
B)  Current ratio 
C)  Days to collect ratio 
D)  Days to sell ratio

Question 17

Net income was $418,600 in the current year and $364,000 in the prior year. The year-to-year percentage change in net income is closest to:

Accepted Answer

A)  15%. 
B)  55%. 
C)  87%. 
D)  13%. 
A)  15%. 
B)  55%. 
C)  87%. 
D)  13%.

Question 18

Benchmarks are required to evaluate a company's performance

Accepted Answer

A) True 
 B)False

Question 19

A company's comparative balance sheet show total assets of $990,000 and $900,000, for the current and prior years, respectively. The percentage change to be reported in the horizontal analysis is an increase of:

Accepted Answer

A)  10%. 
B)  9%. 
C)  5%. 
D)  4%. 
A)  10%. 
B)  9%. 
C)  5%. 
D)  4%.

Question 20

Which of the following measures would assist in assessing the liquidity of a company?

Accepted Answer

A)  Return on equity 
B)  Fixed asset turnover ratio 
C)  Receivables turnover ratio 
D)  Times interest earned 
A)  Return on equity 
B)  Fixed asset turnover ratio 
C)  Receivables turnover ratio 
D)  Times interest earned

When evaluating its net profit margin for the current year, Coca Cola would most likely use all of the following benchmarks except:

Which of the following ratios is calculated by dividing net income by revenues?

In a common size income statement, each item on the income statement is expressed as a percentage of:

A company has a debt-to-assets ratio of 0.45. If the company then borrows cash from the bank to finance a building acquisition, which of the following is a correct statement?

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover

Company X has net sales revenue of $780,000, cost of goods sold of $343,200, and all other expenses of $327,600. The net profit margin is closest to:

The ratio that measures the company's ability to meet required interest payments is the:

Which of the following measures would assist in assessing the profitability of a company?

The going-concern assumption states that the:

Which of the following is not a profitability ratio?

Cost of goods sold divided by average inventory is the calculation for which of the following ratios?

If net income is rising, but net sales revenue and the gross profit percentage remain the same, then:

Which of the following is a profitability measure?

During the current accounting period, revenue from credit sales is $671,000. The Accounts Receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period. Which of the following statements is correct?

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Net income was $418,600 in the current year and $364,000 in the prior year. The year-to-year percentage change in net income is closest to:

Benchmarks are required to evaluate a company's performance

A company's comparative balance sheet show total assets of $990,000 and $900,000, for the current and prior years, respectively. The percentage change to be reported in the horizontal analysis is an increase of:

Which of the following measures would assist in assessing the liquidity of a company?

Introduction to Managerial Accounting

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Filters

Exam 13: Financial Statement Analysis

When evaluating its net profit margin for the current year, Coca Cola would most likely use all of the following benchmarks except:

Which of the following ratios is calculated by dividing net income by revenues?

In a common size income statement, each item on the income statement is expressed as a percentage of:

A company has a debt-to-assets ratio of 0.45. If the company then borrows cash from the bank to finance a building acquisition, which of the following is a correct statement?

A company with a high inventory turnover requires a larger investment in inventory than another company of similar sales with a lower inventory turnover

Company X has net sales revenue of $780,000, cost of goods sold of $343,200, and all other expenses of $327,600. The net profit margin is closest to:

The ratio that measures the company's ability to meet required interest payments is the:

Which of the following measures would assist in assessing the profitability of a company?

The going-concern assumption states that the:

Which of the following is not a profitability ratio?

Cost of goods sold divided by average inventory is the calculation for which of the following ratios?

If net income is rising, but net sales revenue and the gross profit percentage remain the same, then:

Which of the following is a profitability measure?

During the current accounting period, revenue from credit sales is $671,000. The Accounts Receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period. Which of the following statements is correct?

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Net income was $418,600 in the current year and $364,000 in the prior year. The year-to-year percentage change in net income is closest to:

Benchmarks are required to evaluate a company's performance

A company's comparative balance sheet show total assets of $990,000 and $900,000, for the current and prior years, respectively. The percentage change to be reported in the horizontal analysis is an increase of:

Which of the following measures would assist in assessing the liquidity of a company?

Introduction to Managerial Accounting

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Filters