Question 1

Which ratio is a test of liquidity?

Accepted Answer

A) Net profit margin 
B) Inventory turnover 
C) Times interest earned 
D) Debt-to-assets 
A) Net profit margin 
B) Inventory turnover 
C) Times interest earned 
D) Debt-to-assets

Question 2

At the end of last year,Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000.The company issued shares to new stockholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:

Accepted Answer

A) debt-to-assets ratio will increase. 
B) debt-to-assets ratio will decrease. 
C) net profit margin ratio will increase. 
D) net profit margin ratio will decrease. 
A) debt-to-assets ratio will increase. 
B) debt-to-assets ratio will decrease. 
C) net profit margin ratio will increase. 
D) net profit margin ratio will decrease.

Question 3

Dearborn Company has earnings per share of $2.40,it paid a dividend of $1.00 per share,and the market price of the company's stock is $90 per share.The price/earnings ratio is closest to:

Accepted Answer

A) 37.50. 
B) 64.29. 
C) 2.40. 
D) 2.00. 
A) 37.50. 
B) 64.29. 
C) 2.40. 
D) 2.00.

Question 4

Which of the following is calculated by dividing net revenue by average net fixed assets?

Accepted Answer

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

Question 5

Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?

Accepted Answer

A) 2.0 
B) 1.8 
C) 2.5 
D) 2.1 
A) 2.0 
B) 1.8 
C) 2.5 
D) 2.1

Question 6

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Accepted Answer

A) Liquidity 
B) Market share 
C) Profitability 
D) Solvency 
A) Liquidity 
B) Market share 
C) Profitability 
D) Solvency

Question 7

Ratio analysis:

Accepted Answer

A) is required by GAAP as part of every company's income statement and balance sheet. 
B) will always identify the best investment decision. 
C) will tell you how a company will perform in the future. 
D) allows you to evaluate how well a company has performed relative to other different-sized companies within the same industry. 
A) is required by GAAP as part of every company's income statement and balance sheet. 
B) will always identify the best investment decision. 
C) will tell you how a company will perform in the future. 
D) allows you to evaluate how well a company has performed relative to other different-sized companies within the same industry.

Question 8

If the debt-to-assets ratio is 0.73,it means that 73% of the company's financing has been provided by stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following will increase earnings per share?

Accepted Answer

A) A ten percent increase in net income and a ten percent increase in the average number of shares of common stock outstanding 
B) A ten percent decrease in net income and a ten percent increase in the average number of shares of common stock outstanding 
C) A ten percent increase in net income and a ten percent decrease in the average number of shares of common stock outstanding 
D) A ten percent decrease in net income and a ten percent decrease in the average number of shares of common stock outstanding 
A) A ten percent increase in net income and a ten percent increase in the average number of shares of common stock outstanding 
B) A ten percent decrease in net income and a ten percent increase in the average number of shares of common stock outstanding 
C) A ten percent increase in net income and a ten percent decrease in the average number of shares of common stock outstanding 
D) A ten percent decrease in net income and a ten percent decrease in the average number of shares of common stock outstanding

Question 10

Tilden Industries reported net sales revenue of $1,700,000 and paid no dividends during the current year.The following information is also available at the end of the current and prior years:
Current Year Prior Year
Total Current Assets $1,000,000 $ 900,000
Property,Plant,and Equipment,Net 1,700,000 1,400,000
Total Current Liabilities 450,000 390,000
Total Long-Term Liabilities 600,000 500,000
Common Stock,$5 Par 1,000,000 1,000,000
Paid-In Capital in Excess of Par 200,000 200,000
Retained Earnings 450,000 210,000
There was no preferred stock outstanding during the current year.
Required:
Part a.Calculate the return on equity for the current year.
Part b.Calculate the debt-to-assets ratio for the current year.
Part c.Calculate the fixed asset turnover ratio for the current year.
Part d.Calculate the current ratio for the current year.
Round all ratios to two decimal points.

Accepted Answer

Part a
Average common stockholders' equi

Question 11

Fullerton Co.has the following information from its accounting records:   If Fullerton uses cash of $10,000 to pay a current liability,its:

Accepted Answer

A) current ratio increases and its debt-to-assets ratio increases. 
B) current ratio increases and its debt-to-assets ratio decreases. 
C) current ratio decreases and its debt-to-assets ratio increases. 
D) current ratio decreases and its debt-to-assets ratio decreases. 
A) current ratio increases and its debt-to-assets ratio increases. 
B) current ratio increases and its debt-to-assets ratio decreases. 
C) current ratio decreases and its debt-to-assets ratio increases. 
D) current ratio decreases and its debt-to-assets ratio decreases.

Question 12

Cleveland Co.'s price/earnings ratio is 15.3.Its closest competitor,Walt,Inc.has a Price/Earnings ratio of 9.4.Which of the following would not be a valid conclusion to draw from a comparison of the two companies' Price/Earnings ratios?

Accepted Answer

A) Cleveland Co.'s stock is overpriced. 
B) Investors believe Cleveland Co.has a brighter future than Walt,Inc. 
C) Cleveland has been more profitable than Walt,Inc. 
D) The stock price of Cleveland Co.has been bid up due to rumors of a merger. 
A) Cleveland Co.'s stock is overpriced. 
B) Investors believe Cleveland Co.has a brighter future than Walt,Inc. 
C) Cleveland has been more profitable than Walt,Inc. 
D) The stock price of Cleveland Co.has been bid up due to rumors of a merger.

Question 13

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

Question 14

Which of the following ratios is used to evaluate solvency?

Accepted Answer

A) Fixed asset turnover ratio 
B) Days to sell ratio 
C) Current ratio 
D) Times interest earned 
A) Fixed asset turnover ratio 
B) Days to sell ratio 
C) Current ratio 
D) Times interest earned

Question 15

Which of the following ratios is used to evaluate solvency?

Accepted Answer

A) Earnings per share (EPS) 
B) Fixed asset turnover 
C) Debt-to-assets 
D) Current ratio 
A) Earnings per share (EPS) 
B) Fixed asset turnover 
C) Debt-to-assets 
D) Current ratio

Question 16

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 17

The following information is available for a company for the current year:
Net Sales Revenue $ 345,000
Cost of Goods Sold 205,000
Average Accounts Receivable 32,500
Average Inventory 9,450
Average Net Fixed Assets 81,250
Average Total Assets 130,000
Required:
Part a.Calculate the receivables turnover ratio for the current year.
Part b.Calculate the days to collect for the current year.
Part c.Calculate the inventory turnover ratio for the current year.
Part d.Calculate the days to sell for the current year.
Round all ratios to two decimal points.

Accepted Answer

Part a
Receivables turnover ratio = Net

Question 18

A trend analysis to determine a year-to-year dollar amount change is calculated by subtracting the:

Accepted Answer

A) previous period amount from the current amount. 
B) current period amount from the previous period amount. 
C) current period amount from the previous period amount and then dividing the result by the previous period amount. 
D) previous period amount from the current period amount and then dividing the result by the current period amount. 
A) previous period amount from the current amount. 
B) current period amount from the previous period amount. 
C) current period amount from the previous period amount and then dividing the result by the previous period amount. 
D) previous period amount from the current period amount and then dividing the result by the current period amount.

Question 19

Willow Manufacturing had net Accounts Receivable of $600,000 at the beginning of the year and $740,000 at the end of the year.Net Sales Revenue for 2019 was $5,200,000.What is the days to collect from customers?

Accepted Answer

A) 60.00 
B) 42.12 
C) 51.94 
D) 47.03 
A) 60.00 
B) 42.12 
C) 51.94 
D) 47.03

Question 20

Which of the measures below is used to assess profitability?

Accepted Answer

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

Which ratio is a test of liquidity?

At the end of last year,Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000.The company issued shares to new stockholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:

Dearborn Company has earnings per share of $2.40,it paid a dividend of $1.00 per share,and the market price of the company's stock is $90 per share.The price/earnings ratio is closest to:

Which of the following is calculated by dividing net revenue by average net fixed assets?

Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Ratio analysis:

If the debt-to-assets ratio is 0.73,it means that 73% of the company's financing has been provided by stockholders' equity.

Which of the following will increase earnings per share?

Fullerton Co.has the following information from its accounting records: If Fullerton uses cash of $10,000 to pay a current liability,its:

Cleveland Co.'s price/earnings ratio is 15.3.Its closest competitor,Walt,Inc.has a Price/Earnings ratio of 9.4.Which of the following would not be a valid conclusion to draw from a comparison of the two companies' Price/Earnings ratios?

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

Which of the following ratios is used to evaluate solvency?

Which of the following ratios is used to evaluate solvency?

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

A trend analysis to determine a year-to-year dollar amount change is calculated by subtracting the:

Willow Manufacturing had net Accounts Receivable of $600,000 at the beginning of the year and $740,000 at the end of the year.Net Sales Revenue for 2019 was $5,200,000.What is the days to collect from customers?

Which of the measures below is used to assess profitability?

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

Which ratio is a test of liquidity?

At the end of last year,Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000.The company issued shares to new stockholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:

Dearborn Company has earnings per share of $2.40,it paid a dividend of $1.00 per share,and the market price of the company's stock is $90 per share.The price/earnings ratio is closest to:

Which of the following is calculated by dividing net revenue by average net fixed assets?

Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Ratio analysis:

If the debt-to-assets ratio is 0.73,it means that 73% of the company's financing has been provided by stockholders' equity.

Which of the following will increase earnings per share?

Fullerton Co.has the following information from its accounting records: If Fullerton uses cash of $10,000 to pay a current liability,its:

Cleveland Co.'s price/earnings ratio is 15.3.Its closest competitor,Walt,Inc.has a Price/Earnings ratio of 9.4.Which of the following would not be a valid conclusion to draw from a comparison of the two companies' Price/Earnings ratios?

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

Which of the following ratios is used to evaluate solvency?

Which of the following ratios is used to evaluate solvency?

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

A trend analysis to determine a year-to-year dollar amount change is calculated by subtracting the:

Willow Manufacturing had net Accounts Receivable of $600,000 at the beginning of the year and $740,000 at the end of the year.Net Sales Revenue for 2019 was $5,200,000.What is the days to collect from customers?

Which of the measures below is used to assess profitability?

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