Question 1

Millward Corporation's books disclosed the following information for the year ended December 31, 2011:
 
Millward's accounts receivable turnover is

Accepted Answer

A)  3.75 times. 
B)  4.35 times. 
C)  5.00 times. 
D)  5.80 times. 
A)  3.75 times. 
B)  4.35 times. 
C)  5.00 times. 
D)  5.80 times.

Question 2

The book value per share of common stock measures

Accepted Answer

A)  liquidity. 
B)  profitability. 
C)  equity position and coverage. 
D)  efficiency. 
A)  liquidity. 
B)  profitability. 
C)  equity position and coverage. 
D)  efficiency.

Question 3

Comparative balance sheet data for the Addyson Co. at the end of 2010 and 2011 follows:
   
Prepare a common-size balance sheet comparing financial structure percentages for the two-year period. Use total assets to standardize.

Accepted Answer

The answer of Comparative balance sheet data for the Addyson...

Question 4

The following information has been collected regarding Douglas Company:
   
Estimate a price per share for the stock of Douglas using the following equity valuation models:

Accepted Answer

1. Constant future dividends
2. Constant

Question 5

The following 3 ratios have been computed using the financial statements for the year ended December 31, 2011, for Arthur Company:
   
The following additional information has been assembled:
   
Show how the values for the 3 ratios computed above differ if Arthur had used FIFO, depreciated the asset over 8 years, and recognized only 5% of its environmental cleanup obligation. Compute how the financial statements would differ if the alternative accounting methods had been used. Do not treat the use of these alternative methods as accounting changes. Ignore any income tax effects.

Accepted Answer

Adjustments:
(a)Using FIFO:
Ending inven

Question 6

Income statements for LaRue Co. show the following:
   
From the data presented, calculate the following ratios for 2011 and 2010:

Accepted Answer

The answer of Income statements for LaRue Co. show the...

Question 7

Selected information for Henry Company is as follows:
 
Henry's return on common stockholder's equity, rounded to the nearest percentage point, for 2011 is

Accepted Answer

A)  20 percent. 
B)  21 percent. 
C)  28 percent. 
D)  40 percent. 
A)  20 percent. 
B)  21 percent. 
C)  28 percent. 
D)  40 percent.

Question 8

Which of the following is an appropriate computation for return on investment?

Accepted Answer

A)  Net income divided by total assets 
B)  Net income divided by sales 
C)  Sales divided by total assets 
D)  Sales divided by stockholders' equity 
A)  Net income divided by total assets 
B)  Net income divided by sales 
C)  Sales divided by total assets 
D)  Sales divided by stockholders' equity

Question 9

An entity sells an equal dollar amount of convertible preferred stock and long-term notes payable. Prior to these transactions, total debt was less than total equity. How did the sale of the convertible preferred stock and the long-term notes payable affect the company's debt to total assets ratio?

Accepted Answer

A)  The debt to total assets ratio would decrease. 
B)  The debt to total assets ratio would increase. 
C)  The debt to total assets ratio would remain the same. 
D)  The effect on the debt to total assets ratio cannot be determined from the information given. 
A)  The debt to total assets ratio would decrease. 
B)  The debt to total assets ratio would increase. 
C)  The debt to total assets ratio would remain the same. 
D)  The effect on the debt to total assets ratio cannot be determined from the information given.

Question 10

Which of the following ratios does not measure liquidity?

Accepted Answer

A)  Net cash flow to current liabilities 
B)  Working capital to total assets 
C)  Current ratio 
D)  Quick ratio 
A)  Net cash flow to current liabilities 
B)  Working capital to total assets 
C)  Current ratio 
D)  Quick ratio

Question 11

Selected information from the accounting records of the Vassar Company is as follows:
 
What was Vassar's gross margin for 2011?

Accepted Answer

A)  $150,000 
B)  $200,000 
C)  $400,000 
D)  $500,000 
A)  $150,000 
B)  $200,000 
C)  $400,000 
D)  $500,000

Question 12

A measure of profitability analysis is

Accepted Answer

A)  times interest earned. 
B)  cash flow per share. 
C)  quick ratio. 
D)  dividend payout ratio. 
A)  times interest earned. 
B)  cash flow per share. 
C)  quick ratio. 
D)  dividend payout ratio.

Question 13

Selected information from the 2011 and 2010 financial statements of SCL Corporation is presented below:

Refer to the SCL Corporation information above. SCL's quick (acid test) ratio as December 31, 2011, is

Accepted Answer

A)  1.44 to 1. 
B)  1.50 to 1. 
C)  1.67 to 1. 
D)  1.66 to 1. 
A)  1.44 to 1. 
B)  1.50 to 1. 
C)  1.67 to 1. 
D)  1.66 to 1.

Question 14

The calculation of the return on total assets ratio would use all of the following except

Accepted Answer

A)  net sales. 
B)  average stockholders' equity. 
C)  average total assets. 
D)  total assets. 
A)  net sales. 
B)  average stockholders' equity. 
C)  average total assets. 
D)  total assets.

Question 15

Selected financial data of Alexander Corporation for the year ended December 31, 2011, is presented below:
 
Common stock dividends were $120,000. The times-interest-earned ratio is

Accepted Answer

A)  2.8 to 1. 
B)  4.8 to 1. 
C)  6.0 to 1. 
D)  9.0 to 1. 
A)  2.8 to 1. 
B)  4.8 to 1. 
C)  6.0 to 1. 
D)  9.0 to 1.

Question 16

Cosmo Company is expected to pay a $0.50 per share dividend at the end of the year. The dividend is expected to grow at a constant rate of 7 percent per year. The required rate of return on the stock is 15 percent.
Required:
What is the value per share of the company's stock?

Accepted Answer

Dividend = $0.50; gr

Question 17

Cleybourne Company wrote off an $800 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,100. The current ratio after the write-off of the uncollectible account

Accepted Answer

A)  would be less than before the write-off of the account. 
B)  would be greater than before the write-off of the account. 
C)  would be the same as before the write-off of the account. 
D)  cannot be determined with the information given. 
A)  would be less than before the write-off of the account. 
B)  would be greater than before the write-off of the account. 
C)  would be the same as before the write-off of the account. 
D)  cannot be determined with the information given.

Question 18

Information from Blain Company's balance sheet is as follows:
 
What is Blain's current ratio?

Accepted Answer

A)  0.26 to 1 
B)  0.30 to 1 
C)  1.80 to 1 
D)  3.60 to 1 
A)  0.26 to 1 
B)  0.30 to 1 
C)  1.80 to 1 
D)  3.60 to 1

Question 19

The following data were abstracted from the records of Johnson Corporation for the year:
 
How many times was bond interest earned?

Accepted Answer

A)  7.67 
B)  11.67 
C)  12.67 
D)  13.67 
A)  7.67 
B)  11.67 
C)  12.67 
D)  13.67

Question 20

Which of the following ratios would not be positively affected by a change from LIFO to FIFO, assuming that prices are rising?

Accepted Answer

A)  Current ratio 
B)  Debt to equity ratio 
C)  Times interest earned 
D)  Quick ratio 
A)  Current ratio 
B)  Debt to equity ratio 
C)  Times interest earned 
D)  Quick ratio

Exam 23: Analysis of Financial Statements

Millward Corporation's books disclosed the following information for the year ended December 31, 2011: Millward's accounts receivable turnover is

The book value per share of common stock measures

Comparative balance sheet data for the Addyson Co. at the end of 2010 and 2011 follows: Prepare a common-size balance sheet comparing financial structure percentages for the two-year period. Use total assets to standardize.

The following information has been collected regarding Douglas Company: Estimate a price per share for the stock of Douglas using the following equity valuation models:

Income statements for LaRue Co. show the following: From the data presented, calculate the following ratios for 2011 and 2010:

Selected information for Henry Company is as follows: Henry's return on common stockholder's equity, rounded to the nearest percentage point, for 2011 is

Which of the following is an appropriate computation for return on investment?

An entity sells an equal dollar amount of convertible preferred stock and long-term notes payable. Prior to these transactions, total debt was less than total equity. How did the sale of the convertible preferred stock and the long-term notes payable affect the company's debt to total assets ratio?

Which of the following ratios does not measure liquidity?

Selected information from the accounting records of the Vassar Company is as follows: What was Vassar's gross margin for 2011?

A measure of profitability analysis is

Selected information from the 2011 and 2010 financial statements of SCL Corporation is presented below: Refer to the SCL Corporation information above. SCL's quick (acid test) ratio as December 31, 2011, is

The calculation of the return on total assets ratio would use all of the following except

Selected financial data of Alexander Corporation for the year ended December 31, 2011, is presented below: Common stock dividends were $120,000. The times-interest-earned ratio is

Cosmo Company is expected to pay a $0.50 per share dividend at the end of the year. The dividend is expected to grow at a constant rate of 7 percent per year. The required rate of return on the stock is 15 percent. Required: What is the value per share of the company's stock?

Cleybourne Company wrote off an $800 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,100. The current ratio after the write-off of the uncollectible account

Information from Blain Company's balance sheet is as follows: What is Blain's current ratio?

The following data were abstracted from the records of Johnson Corporation for the year: How many times was bond interest earned?

Which of the following ratios would not be positively affected by a change from LIFO to FIFO, assuming that prices are rising?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

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