Question 1

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

Accepted Answer

A) Debt-to-assets and times interest earned 
B) Fixed asset turnover and EPS 
C) Return on equity and debt-to-assets 
D) Current ratio and times interest earned 
A) Debt-to-assets and times interest earned 
B) Fixed asset turnover and EPS 
C) Return on equity and debt-to-assets 
D) Current ratio and times interest earned

Question 2

Vertical analysis:

Accepted Answer

A) identifies the relative contribution made by each financial statement line item. 
B) identifies trends over time. 
C) provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars. 
D) involves comparing amounts across different financial statements. 
A) identifies the relative contribution made by each financial statement line item. 
B) identifies trends over time. 
C) provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars. 
D) involves comparing amounts across different financial statements.

Question 3

Which income statement line item had the largest percentage increase from the prior year to the current year?

Accepted Answer

A) Depreciation Expense 
B) Cost of Goods Sold 
C) Interest Expense 
D) Sales 
A) Depreciation Expense 
B) Cost of Goods Sold 
C) Interest Expense 
D) Sales

Question 4

Which of these are solvency ratios?

Accepted Answer

A) Debt-to-assets 
B) Current ratio 
C) Return on equity 
D) Net profit margin 
A) Debt-to-assets 
B) Current ratio 
C) Return on equity 
D) Net profit margin

Question 5

A company that has a current ratio less than one cannot cover:

Accepted Answer

A) current liabilities with its current cash flow. 
B) current expenses with its current sales revenue. 
C) expenses with its current revenues. 
D) current liabilities with its current assets. 
A) current liabilities with its current cash flow. 
B) current expenses with its current sales revenue. 
C) expenses with its current revenues. 
D) current liabilities with its current assets.

Question 6

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 7

Campbell Co.has net sales revenue of $1,000,000,cost of goods sold of $680,000,and all other expenses of $232,000.The beginning balance of stockholders' equity is $320,000 and the beginning balance of fixed assets is $288,800.The ending balance of stockholders' equity is $480,000 and the ending balance of fixed assets is $311,200.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 8

Which of these is not one of the categories of ratio analysis?

Accepted Answer

A) Profitability 
B) Liquidity 
C) Solvency 
D) Probability 
A) Profitability 
B) Liquidity 
C) Solvency 
D) Probability

Question 9

The following information comes from the balance sheets and income statements of Crosby Co.:   What is the times interest earned ratio for the current year?

Accepted Answer

A) 2.2 
B) 5.2 
C) 6.2 
D) 8.0 
A) 2.2 
B) 5.2 
C) 6.2 
D) 8.0

Question 10

The ratio that measures how many times a company replenishes its inventory in a year is the:

Accepted Answer

A) days to sell ratio. 
B) receivables turnover ratio. 
C) inventory turnover ratio. 
D) days to collect ratio. 
A) days to sell ratio. 
B) receivables turnover ratio. 
C) inventory turnover ratio. 
D) days to collect ratio.

Question 11

Hubbard Company had 8,000 shares of common stock outstanding throughout the year.The following information is also available:
   Required:
Calculate the Price/Earnings ratio at the end of the current year.

Accepted Answer

EPS = Net income/Average commo

Question 12

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

Accepted Answer

A) 76% 
B) 24% 
C) 31% 
D) 18% 
A) 76% 
B) 24% 
C) 31% 
D) 18%

Question 13

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

Accepted Answer

A) Fixed asset turnover 
B) Net profit margin 
C) Inventory turnover 
D) Earnings per share 
A) Fixed asset turnover 
B) Net profit margin 
C) Inventory turnover 
D) Earnings per share

Question 14

Assume the following sales data for a company:   By what percentage did sales differ between Years 1 and 2 and Years 2 and 3,respectively?

Accepted Answer

A) 40.0% and (10.7%) 
B) 28.6% and (12.0%) 
C) 40.0% and (15.0%) 
D) 32.0% and (10.7%) 
A) 40.0% and (10.7%) 
B) 28.6% and (12.0%) 
C) 40.0% and (15.0%) 
D) 32.0% and (10.7%)

Question 15

Which of the following statements about the Price/Earnings ratio is not correct?

Accepted Answer

A) The Price/Earnings ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings. 
B) A high Price/Earnings ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income. 
C) If EPS decreases and there is no change in the market price of the stock,the Price/Earnings ratio will decrease. 
D) If the market price of the stock increases and there is no change in EPS,the Price/Earnings ratio will increase. 
A) The Price/Earnings ratio indicates how much investors are willing to pay for a share of a company's stock as a multiple of current earnings. 
B) A high Price/Earnings ratio may mean that investors have pushed the price of the stock up in anticipation of higher future net income. 
C) If EPS decreases and there is no change in the market price of the stock,the Price/Earnings ratio will decrease. 
D) If the market price of the stock increases and there is no change in EPS,the Price/Earnings ratio will increase.

Question 16

If an analyst wants to examine a company's current ability to generate income,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 17

Which of the following ratios is calculated by dividing current assets by current liabilities?

Accepted Answer

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

Question 18

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 19

Which of these ratios measure liquidity?

Accepted Answer

A) Receivables turnover 
B) Net profit margin 
C) Debt-to-assets ratio 
D) Fixed asset turnover 
A) Receivables turnover 
B) Net profit margin 
C) Debt-to-assets ratio 
D) Fixed asset turnover

Question 20

Which of the following ratios is a solvency ratio?

Accepted Answer

A) Net profit margin ratio 
B) Current ratio 
C) Fixed asset turnover ratio 
D) Debt-to-assets ratio 
A) Net profit margin ratio 
B) Current ratio 
C) Fixed asset turnover ratio 
D) Debt-to-assets ratio

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

Vertical analysis:

Which income statement line item had the largest percentage increase from the prior year to the current year?

Which of these are solvency ratios?

A company that has a current ratio less than one cannot cover:

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

Which of these is not one of the categories of ratio analysis?

The following information comes from the balance sheets and income statements of Crosby Co.: What is the times interest earned ratio for the current year?

The ratio that measures how many times a company replenishes its inventory in a year is the:

Hubbard Company had 8,000 shares of common stock outstanding throughout the year.The following information is also available: Required: Calculate the Price/Earnings ratio at the end of the current year.

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

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

Assume the following sales data for a company: By what percentage did sales differ between Years 1 and 2 and Years 2 and 3,respectively?

Which of the following statements about the Price/Earnings ratio is not correct?

If an analyst wants to examine a company's current ability to generate income,which of the following would best be considered?

Which of the following ratios is calculated by dividing current assets by current liabilities?

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

Which of these ratios measure liquidity?

Which of the following ratios is a solvency ratio?

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 of the following measures would assist in assessing the solvency of a company?

Vertical analysis:

Which income statement line item had the largest percentage increase from the prior year to the current year?

Which of these are solvency ratios?

A company that has a current ratio less than one cannot cover:

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

Which of these is not one of the categories of ratio analysis?

The following information comes from the balance sheets and income statements of Crosby Co.: What is the times interest earned ratio for the current year?

The ratio that measures how many times a company replenishes its inventory in a year is the:

Hubbard Company had 8,000 shares of common stock outstanding throughout the year.The following information is also available: Required: Calculate the Price/Earnings ratio at the end of the current year.

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

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

Assume the following sales data for a company: By what percentage did sales differ between Years 1 and 2 and Years 2 and 3,respectively?

Which of the following statements about the Price/Earnings ratio is not correct?

If an analyst wants to examine a company's current ability to generate income,which of the following would best be considered?

Which of the following ratios is calculated by dividing current assets by current liabilities?

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

Which of these ratios measure liquidity?

Which of the following ratios is a solvency ratio?

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