Question 1

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2022.What is the 2022 profit margin?

Accepted Answer

A) 6% 
B) 4% 
C) 40% 
D) 67% 
A) 6% 
B) 4% 
C) 40% 
D) 67%

Question 2

Return on common stockholders' equity is most closely related to

Accepted Answer

A) gross profit rate and operating expenses to sales ratio. 
B) profit margin and free cash flow. 
C) times interest earned and debt to stockholders' equity ratio. 
D) return on asset and leverage (debt to assets ratio). 
A) gross profit rate and operating expenses to sales ratio. 
B) profit margin and free cash flow. 
C) times interest earned and debt to stockholders' equity ratio. 
D) return on asset and leverage (debt to assets ratio).

Question 3

Long-term creditors are usually most interested in evaluating

Accepted Answer

A) liquidity. 
B) marketability. 
C) profitability. 
D) solvency. 
A) liquidity. 
B) marketability. 
C) profitability. 
D) solvency.

Question 4

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year.The average inventory for the year amounted to $1,250,000.The average days in inventory during the year was approximately

Accepted Answer

A) 261 days. 
B) 122 days. 
C) 49 days. 
D) 35 days. 
A) 261 days. 
B) 122 days. 
C) 49 days. 
D) 35 days.

Question 5

The current ratio would be of most interest to

Accepted Answer

A) short-term creditors. 
B) long-term creditors. 
C) stockholders. 
D) customers. 
A) short-term creditors. 
B) long-term creditors. 
C) stockholders. 
D) customers.

Question 6

Solvency is of most interest to

Accepted Answer

A) short-term creditors. 
B) stockholders. 
C) competitors. 
D) long-term creditors. 
A) short-term creditors. 
B) stockholders. 
C) competitors. 
D) long-term creditors.

Question 7

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.   What is the accounts receivable turnover for this company?

Accepted Answer

A) 2.2 times 
B) 4.4 times 
C) 7.7 times 
D) 3.9 times 
A) 2.2 times 
B) 4.4 times 
C) 7.7 times 
D) 3.9 times

Question 8

Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

Accepted Answer

A) True 
 B)False

Question 9

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.     What is the accounts receivable turnover for this company?

Accepted Answer

A) 2.8 times 
B) 2 times 
C) 3.4 times 
D) 3 times 
A) 2.8 times 
B) 2 times 
C) 3.4 times 
D) 3 times

Question 10

Net sales are $3,250,000, beginning total assets are $1,400,000, and the asset turnover is 2.5 times.What is the ending total asset balance?

Accepted Answer

A) $1,300,000 
B) $1,200,000 
C) $1,400,000 
D) $1,500,000 
A) $1,300,000 
B) $1,200,000 
C) $1,400,000 
D) $1,500,000

Question 11

Which one of the following is not a liquidity ratio?

Accepted Answer

A) Current ratio 
B) Inventory turnover 
C) Average collection period 
D) Return on assets 
A) Current ratio 
B) Inventory turnover 
C) Average collection period 
D) Return on assets

Question 12

Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2022.The weighted average number of shares outstanding in 2022 was 400,000 shares.Tito Corporation's common stock is selling for $50 per share on the NASDAQ.Tito Corporation's price-earnings ratio is

Accepted Answer

A) 20 times. 
B) 12 times. 
C) 10 times. 
D) 5 times. 
A) 20 times. 
B) 12 times. 
C) 10 times. 
D) 5 times.

Question 13

Comparisons of financial data made within a company are called

Accepted Answer

A) intracompany comparisons. 
B) interior comparisons. 
C) intercompany comparisons. 
D) industry comparisons. 
A) intracompany comparisons. 
B) interior comparisons. 
C) intercompany comparisons. 
D) industry comparisons.

Question 14

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.   What is the return on assets for this company?

Accepted Answer

A) 6.8% 
B) 10.0% 
C) 11.7% 
D) 26.7% 
A) 6.8% 
B) 10.0% 
C) 11.7% 
D) 26.7%

Question 15

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

Accepted Answer

A) True 
 B)False

Question 16

The current ratio is a measure of all the ratios calculated for the current year.

Accepted Answer

A) True 
 B)False

Question 17

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

Accepted Answer

A) Current ratio 
B) Inventory turnover 
C) Asset turnover 
D) Accounts receivable turnover 
A) Current ratio 
B) Inventory turnover 
C) Asset turnover 
D) Accounts receivable turnover

Question 18

Salamagundi, Inc.has the following Income Statement (in millions):   Using vertical analysis, what percentage is assigned to gross profit?

Accepted Answer

A) 37.5% 
B) 100% 
C) 60% 
D) 62.5% 
A) 37.5% 
B) 100% 
C) 60% 
D) 62.5%

Question 19

The best way to study the relationship of the components within a financial statement is to prepare

Accepted Answer

A) common size statements. 
B) a trend analysis. 
C) profitability analysis. 
D) ratio analysis. 
A) common size statements. 
B) a trend analysis. 
C) profitability analysis. 
D) ratio analysis.

Question 20

Which of the following would be considered an "Other Comprehensive Income" item?

Accepted Answer

A) Net income 
B) Gain on disposal of discontinued operations 
C) Other revenues and gains 
D) Unrealized loss on available-for-sale securities 
A) Net income 
B) Gain on disposal of discontinued operations 
C) Other revenues and gains 
D) Unrealized loss on available-for-sale securities

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2022.What is the 2022 profit margin?

Return on common stockholders' equity is most closely related to

Long-term creditors are usually most interested in evaluating

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year.The average inventory for the year amounted to $1,250,000.The average days in inventory during the year was approximately

The current ratio would be of most interest to

Solvency is of most interest to

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the accounts receivable turnover for this company?

Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the accounts receivable turnover for this company?

Net sales are $3,250,000, beginning total assets are $1,400,000, and the asset turnover is 2.5 times.What is the ending total asset balance?

Which one of the following is not a liquidity ratio?

Comparisons of financial data made within a company are called

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on assets for this company?

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

The current ratio is a measure of all the ratios calculated for the current year.

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

Salamagundi, Inc.has the following Income Statement (in millions): Using vertical analysis, what percentage is assigned to gross profit?

The best way to study the relationship of the components within a financial statement is to prepare

Which of the following would be considered an "Other Comprehensive Income" item?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Understanding Investments in Debt and Equity Securities

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Exam 13: Financial Analysis: The Big Picture

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2022.What is the 2022 profit margin?

Return on common stockholders' equity is most closely related to

Long-term creditors are usually most interested in evaluating

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year.The average inventory for the year amounted to $1,250,000.The average days in inventory during the year was approximately

The current ratio would be of most interest to

Solvency is of most interest to

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the accounts receivable turnover for this company?

Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the accounts receivable turnover for this company?

Net sales are $3,250,000, beginning total assets are $1,400,000, and the asset turnover is 2.5 times.What is the ending total asset balance?

Which one of the following is not a liquidity ratio?

Comparisons of financial data made within a company are called

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on assets for this company?

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

The current ratio is a measure of all the ratios calculated for the current year.

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

Salamagundi, Inc.has the following Income Statement (in millions): Using vertical analysis, what percentage is assigned to gross profit?

The best way to study the relationship of the components within a financial statement is to prepare

Which of the following would be considered an "Other Comprehensive Income" item?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Understanding Investments in Debt and Equity Securities

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