Question 1

In which of the following company attributes would a long-term bond holder be most interested?

Accepted Answer

A) Quality of earnings 
B) Solvency 
C) Profitability 
D) Liquidity 
A) Quality of earnings 
B) Solvency 
C) Profitability 
D) Liquidity B

Question 2

Assume that Charmin and Barker are two retailers selling different goods.Charmin reports a days to sell ratio of 6 days and Barker reports a days to sell ratio of 64 days.What types of merchandise are Charmin and Barker likely to sell,given their measures of days to sell?

Accepted Answer

A) Charmin sells clothing and Barker sells wine. 
B) Charmin sells consumer electronics and Barker sells gasoline. 
C) Charmin sells footwear and Barker sells consumer electronics. 
D) Charmin sells groceries and Barker sells autos. 
A) Charmin sells clothing and Barker sells wine. 
B) Charmin sells consumer electronics and Barker sells gasoline. 
C) Charmin sells footwear and Barker sells consumer electronics. 
D) Charmin sells groceries and Barker sells autos. D

Question 3

Which of the following ratios is used to evaluate a company's liquidity?

Accepted Answer

A) Debt-to-assets ratio 
B) Fixed asset turnover ratio 
C) Return on equity ratio 
D) Current ratio 
A) Debt-to-assets ratio 
B) Fixed asset turnover ratio 
C) Return on equity ratio 
D) Current ratio D

Question 4

Which of the following statements is not true?

Accepted Answer

A) Horizontal analyses help financial statement users recognize changes that unfold over time. 
B) Vertical analyses focus on relationships between items on the same financial statement. 
C) Ratio analyses focus on relationships between items on one or more of the financial statements. 
D) Horizontal analyses help financial statement users recognize changes that occur between companies. 
A) Horizontal analyses help financial statement users recognize changes that unfold over time. 
B) Vertical analyses focus on relationships between items on the same financial statement. 
C) Ratio analyses focus on relationships between items on one or more of the financial statements. 
D) Horizontal analyses help financial statement users recognize changes that occur between companies.

Question 5

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 6

Stockton Co.prepared its income statement containing the information below.Using vertical analysis,what percentages would apply to cost of sales,gross profit,and interest expense,respectively?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 7

Horizontal analysis:

Accepted Answer

A) is used to identify trends over time. 
B) identifies the relative contribution made by each financial statement line item. 
C) provides an understanding of the relationships among various items on financial statements. 
D) involves comparing amounts across different financial statements. 
A) is used to identify trends over time. 
B) identifies the relative contribution made by each financial statement line item. 
C) provides an understanding of the relationships among various items on financial statements. 
D) involves comparing amounts across different financial statements.

Question 8

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

Accepted Answer

A) Company A collects its receivables faster than Company B. 
B) Company B collects its receivables faster than Company A. 
C) Company A makes more sales on account than Company B. 
D) Company B makes more sales on account than Company A. 
A) Company A collects its receivables faster than Company B. 
B) Company B collects its receivables faster than Company A. 
C) Company A makes more sales on account than Company B. 
D) Company B makes more sales on account than Company A.

Question 9

The following information is taken from the financial statements of Clybourn Company for the current year:   On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Accepted Answer

A) 100% 
B) 14% 
C) 60% 
D) Cannot be determined 
A) 100% 
B) 14% 
C) 60% 
D) Cannot be determined

Question 10

Often loan agreements require the borrower to comply with certain requirements,such as maintaining a particular current ratio or limiting future borrowing.To decide if a company has complied with its loan covenants,a creditor would look at the company's:

Accepted Answer

A) financial statements. 
B) chart of accounts. 
C) bank statements. 
D) charter. 
A) financial statements. 
B) chart of accounts. 
C) bank statements. 
D) charter.

Question 11

Which of the following analysis techniques does not pertain to changes over time?

Accepted Answer

A) Trend analysis 
B) Horizontal analysis 
C) Time-series analysis 
D) Vertical analysis 
A) Trend analysis 
B) Horizontal analysis 
C) Time-series analysis 
D) Vertical analysis

Question 12

Net revenue divided by average net fixed assets is the calculation for which of the following ratios?

Accepted Answer

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

Question 13

Which of the following actions would likely increase the Return on Equity (ROE)?

Accepted Answer

A) An increase in the cost of goods sold 
B) The purchase of treasury stock 
C) Issuing shares of preferred stock 
D) An increase in the income tax rate 
A) An increase in the cost of goods sold 
B) The purchase of treasury stock 
C) Issuing shares of preferred stock 
D) An increase in the income tax rate

Question 14

The following information is taken from the financial statements of B.Darin Company:
Net sales revenue $ 900,000
Expenses 600,000
Net income 300,000
Net cash from operations 290,000
Assets,end of current year 600,000
Liabilities,end of current year 100,000
Stockholders' equity,end of current year 500,000
Assets,end of previous year 590,000
Stockholders' equity,end of previous year 490,000
Expenses include interest of $10,000 and income tax of $90,000.There was an average of 40,000 shares of common stock outstanding during the year and the market price of the stock is $15 per share at the end of the year.There was no preferred stock outstanding during the year.
Required:
Calculate the following ratios for the current year:
Part a.Fixed asset turnover
Part b.Return on equity (ROE)
Part c.Earnings per share (EPS)
Part d.Times interest earned
Part e.Price/Earnings ratio
Part f.Debt-to-assets ratio
Part g.Net profit margin

Accepted Answer

Part a
Average total assets = ($600,000

Question 15

Southport Industries has current assets of $900,000 and a current ratio is 2.50.Assume that the company prepays rent for 9 months in the amount of $40,000.The current ratio after this transaction is closest to:

Accepted Answer

A) 2.39. 
B) 2.61. 
C) 2.50. 
D) 2.81. 
A) 2.39. 
B) 2.61. 
C) 2.50. 
D) 2.81.

Question 16

To analyze changes in a company's net income over the last ten years,you should perform:

Accepted Answer

A) horizontal analysis. 
B) vertical analysis. 
C) cross-section analysis. 
D) ratio analysis. 
A) horizontal analysis. 
B) vertical analysis. 
C) cross-section analysis. 
D) ratio analysis.

Question 17

Webster,Inc.has the following information:   What is the Price/Earnings ratio?

Accepted Answer

A) 2.2 
B) 4.0 
C) 6.7 
D) 20.0 
A) 2.2 
B) 4.0 
C) 6.7 
D) 20.0

Question 18

Roscoe Company's comparative balance sheet show total assets of $693,000 and $630,000,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 19

The general goal of horizontal analyses is to identify significant trends.

Accepted Answer

A) True 
 B)False

Question 20

Which of these are liquidity ratios?

Accepted Answer

A) Net profit margin 
B) Receivables turnover 
C) Fixed asset turnover 
D) Times interest earned 
A) Net profit margin 
B) Receivables turnover 
C) Fixed asset turnover 
D) Times interest earned

In which of the following company attributes would a long-term bond holder be most interested?

Assume that Charmin and Barker are two retailers selling different goods.Charmin reports a days to sell ratio of 6 days and Barker reports a days to sell ratio of 64 days.What types of merchandise are Charmin and Barker likely to sell,given their measures of days to sell?

Which of the following ratios is used to evaluate a company's liquidity?

Which of the following statements is not true?

Which of the following is not a profitability ratio?

Stockton Co.prepared its income statement containing the information below.Using vertical analysis,what percentages would apply to cost of sales,gross profit,and interest expense,respectively?

Horizontal analysis:

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

The following information is taken from the financial statements of Clybourn Company for the current year: On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Often loan agreements require the borrower to comply with certain requirements,such as maintaining a particular current ratio or limiting future borrowing.To decide if a company has complied with its loan covenants,a creditor would look at the company's:

Which of the following analysis techniques does not pertain to changes over time?

Net revenue divided by average net fixed assets is the calculation for which of the following ratios?

Which of the following actions would likely increase the Return on Equity (ROE)?

Southport Industries has current assets of $900,000 and a current ratio is 2.50.Assume that the company prepays rent for 9 months in the amount of $40,000.The current ratio after this transaction is closest to:

To analyze changes in a company's net income over the last ten years,you should perform:

Webster,Inc.has the following information: What is the Price/Earnings ratio?

Roscoe Company's comparative balance sheet show total assets of $693,000 and $630,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

The general goal of horizontal analyses is to identify significant trends.

Which of these are liquidity ratios?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Filters

Exam 13: Measuring and Evaluating Financial Performance

In which of the following company attributes would a long-term bond holder be most interested?

Assume that Charmin and Barker are two retailers selling different goods.Charmin reports a days to sell ratio of 6 days and Barker reports a days to sell ratio of 64 days.What types of merchandise are Charmin and Barker likely to sell,given their measures of days to sell?

Which of the following ratios is used to evaluate a company's liquidity?

Which of the following statements is not true?

Which of the following is not a profitability ratio?

Stockton Co.prepared its income statement containing the information below.Using vertical analysis,what percentages would apply to cost of sales,gross profit,and interest expense,respectively?

Horizontal analysis:

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

The following information is taken from the financial statements of Clybourn Company for the current year: On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Often loan agreements require the borrower to comply with certain requirements,such as maintaining a particular current ratio or limiting future borrowing.To decide if a company has complied with its loan covenants,a creditor would look at the company's:

Which of the following analysis techniques does not pertain to changes over time?

Net revenue divided by average net fixed assets is the calculation for which of the following ratios?

Which of the following actions would likely increase the Return on Equity (ROE)?

Southport Industries has current assets of $900,000 and a current ratio is 2.50.Assume that the company prepays rent for 9 months in the amount of $40,000.The current ratio after this transaction is closest to:

To analyze changes in a company's net income over the last ten years,you should perform:

Webster,Inc.has the following information: What is the Price/Earnings ratio?

Roscoe Company's comparative balance sheet show total assets of $693,000 and $630,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

The general goal of horizontal analyses is to identify significant trends.

Which of these are liquidity ratios?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Filters