Question 1

Match the terms with the definitions.
-The ratio of cost of goods sold to net sales.

Accepted Answer

A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover 
A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover

Question 2

The cost of goods sold for a company for the year was $1,900,000. Merchandise inventory at the beginning of the year was $125,000 and merchandise inventory at the end of the year was $133,000. The merchandise inventory turnover for the year was

Accepted Answer

A)  0.1. 
B)  14.7. 
C)  33.8. 
D)  65.5. 
A)  0.1. 
B)  14.7. 
C)  33.8. 
D)  65.5.

Question 3

Match the terms with the definitions.
-The ratio of net income for the year to the average assets for the year.

Accepted Answer

A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover 
A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover

Question 4

The return on total assets is calculated by dividing the net income for the year by the average total assets during the year.

Accepted Answer

A) True 
 B)False

Question 5

Match the terms with the definitions.
-It is a measure of the extent of overall leverage or proportion of borrowed capital with which a business operates.

Accepted Answer

A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover 
A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover

Question 6

Use the following comparative income statements and balance sheets to complete the required ratio analysis:     Additional information:
All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $139,200; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding, 42,000.   Required:
Analyze for 20-B and 20-C the extent to which this corporation is being financed by debt using the (a) ratio of liabilities to stockholders' equity, and analyze its ability to meet its debt obligation using the (b) times interest earned ratio. Indicate whether there has been an improvement or not from 20-B to 20-C. Round all answers to two decimal places.

Accepted Answer

The answer of Use the following comparative income statements and...

Question 7

Perform a vertical analysis of the following comparative income statements for Cheng Corporation. Use net sales as the comparative base.

Accepted Answer

The answer of Perform a vertical analysis of the following...

Question 8

Liquidity measures are intended to indicate an entity's ability to pay long-term debts as they come due.

Accepted Answer

A) True 
 B)False

Question 9

A company has net sales on account of $1,750,000. Net accounts receivable at the beginning of the year are $147,000 and net accounts receivable at the end of the year are $153,000. The accounts receivable turnover is

Accepted Answer

A)  11.9. 
B)  11.7. 
C)  11.4. 
D)  1.0. 
A)  11.9. 
B)  11.7. 
C)  11.4. 
D)  1.0.

Question 10

From the standpoint of the individual stockholder, one of the most important measures of profitability of the firm is the earnings per share.

Accepted Answer

A) True 
 B)False

Question 11

Vertical analysis reports the amount of each item in a statement as a percentage of a designated total.

Accepted Answer

A) True 
 B)False

Question 12

As a general rule, a current ratio of 0.5 to 1 or better is satisfactory.

Accepted Answer

A) True 
 B)False

Question 13

Consider the following:   $\begin{array}{l}
\text { Additional information: }\
\begin{array}{lr}
\text { Total stockholders' equity, January 1, 20-- } & \$ 71,250 \
\text { Accounts receivable, January 1, 20-- } & 19,650 \
\text { Net income for 20-- } & 21,600 \
\text { Merchandise inventory, January 1, 20-- } & 60,750 \
\text { Net credit sales for 20-- } & 105,000
\end{array}
\end{array}$ Required:
You have been provided with the balance sheet for Santos Tier I Center. Calculate the following ratios and round answers to two decimal places.

Accepted Answer

The answer of Consider the following:   \(\begin{array}{l}
\text {...

Question 14

Profitability measures are intended to indicate an entity's ability to earn income by operating efficiently.

Accepted Answer

A) True 
 B)False

Question 15

The net income of a company is $175,000. The average book value of the company's assets is $1,300,000. The return on total assets would be

Accepted Answer

A)  20.00%. 
B)  7.43%. 
C)  600.00%. 
D)  13.46%. 
A)  20.00%. 
B)  7.43%. 
C)  600.00%. 
D)  13.46%.

Question 16

A company has cash, $80,000; temporary investments, $20,000; net receivables, $60,000; and inventory, $450,000. Current liabilities are $200,000. The quick or acid-test ratio is

Accepted Answer

A)  0.54 to 1. 
B)  0.80 to 1. 
C)  2.25 to 1. 
D)  3.05 to 1. 
A)  0.54 to 1. 
B)  0.80 to 1. 
C)  2.25 to 1. 
D)  3.05 to 1.

Question 17

Dividing quick assets by total current liabilities is the calculation for the

Accepted Answer

A)  current ratio. 
B)  return on investment. 
C)  quick or acid-test ratio. 
D)  ratio of liabilities to owner's equity. 
A)  current ratio. 
B)  return on investment. 
C)  quick or acid-test ratio. 
D)  ratio of liabilities to owner's equity.

Question 18

The cost of goods sold for a company for the year was $1,600,000. Merchandise inventory at the beginning of the year was $195,000 and merchandise inventory at the end of the year was $205,000. The average number of days that the inventory was held during the year was

Accepted Answer

A)  8.0 days. 
B)  25.0 days. 
C)  39.6 days. 
D)  45.6 days. 
A)  8.0 days. 
B)  25.0 days. 
C)  39.6 days. 
D)  45.6 days.

Question 19

In calculating the percentage of change (for a comparative financial statement), the amount for the year prior serves as the base.

Accepted Answer

A) True 
 B)False

Question 20

The ratio of earnings before interest and taxes to the interest requirement is called the times interest earned ratio.

Accepted Answer

A) True 
 B)False

Exam 24: Analysis of Financial Statements

Match the terms with the definitions. -The ratio of cost of goods sold to net sales.

The cost of goods sold for a company for the year was $1,900,000. Merchandise inventory at the beginning of the year was $125,000 and merchandise inventory at the end of the year was $133,000. The merchandise inventory turnover for the year was

Match the terms with the definitions. -The ratio of net income for the year to the average assets for the year.

The return on total assets is calculated by dividing the net income for the year by the average total assets during the year.

Match the terms with the definitions. -It is a measure of the extent of overall leverage or proportion of borrowed capital with which a business operates.

Perform a vertical analysis of the following comparative income statements for Cheng Corporation. Use net sales as the comparative base.

Liquidity measures are intended to indicate an entity's ability to pay long-term debts as they come due.

A company has net sales on account of $1,750,000. Net accounts receivable at the beginning of the year are $147,000 and net accounts receivable at the end of the year are $153,000. The accounts receivable turnover is

From the standpoint of the individual stockholder, one of the most important measures of profitability of the firm is the earnings per share.

Vertical analysis reports the amount of each item in a statement as a percentage of a designated total.

As a general rule, a current ratio of 0.5 to 1 or better is satisfactory.

Profitability measures are intended to indicate an entity's ability to earn income by operating efficiently.

The net income of a company is $175,000. The average book value of the company's assets is $1,300,000. The return on total assets would be

A company has cash, $80,000; temporary investments, $20,000; net receivables, $60,000; and inventory, $450,000. Current liabilities are $200,000. The quick or acid-test ratio is

Dividing quick assets by total current liabilities is the calculation for the

The cost of goods sold for a company for the year was $1,600,000. Merchandise inventory at the beginning of the year was $195,000 and merchandise inventory at the end of the year was $205,000. The average number of days that the inventory was held during the year was

In calculating the percentage of change (for a comparative financial statement), the amount for the year prior serves as the base.

The ratio of earnings before interest and taxes to the interest requirement is called the times interest earned ratio.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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