Question 1

Return on total assets measures:

Accepted Answer

A)  The percent of profit in each dollar of net sales. 
B)  A company's ability to increase its asset base from sales. 
C)  A company's ability to increase its asset base from profit. 
D)  A company's ability to produce sales from their assets. 
E)  A company's ability to produce profit from their assets. 
A)  The percent of profit in each dollar of net sales. 
B)  A company's ability to increase its asset base from sales. 
C)  A company's ability to increase its asset base from profit. 
D)  A company's ability to produce sales from their assets. 
E)  A company's ability to produce profit from their assets.

Question 2

Current assets minus current liabilities is called:

Accepted Answer

A)  Profit margin. 
B)  Working capital. 
C)  Quick assets. 
D)  Financial leverage. 
E)  Current ratio. 
A)  Profit margin. 
B)  Working capital. 
C)  Quick assets. 
D)  Financial leverage. 
E)  Current ratio.

Question 3

Accounts receivable turnover is calculated by:

Accepted Answer

A)  Dividing average accounts receivable by net sales and multiplying by 365. 
B)  Dividing net sales by average accounts receivable. 
C)  Dividing profit by average accounts receivable. 
D)  Dividing net sales by average accounts receivable and multiplying by 365. 
E)  Dividing average accounts receivable by net sales. 
A)  Dividing average accounts receivable by net sales and multiplying by 365. 
B)  Dividing net sales by average accounts receivable. 
C)  Dividing profit by average accounts receivable. 
D)  Dividing net sales by average accounts receivable and multiplying by 365. 
E)  Dividing average accounts receivable by net sales.

Question 4

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

Accepted Answer

A)  Earnings per share. 
B)  Current yield. 
C)  Dividend yield. 
D)  Dividend payout ratio. 
E)  Price-earnings ratio. 
A)  Earnings per share. 
B)  Current yield. 
C)  Dividend yield. 
D)  Dividend payout ratio. 
E)  Price-earnings ratio.

Question 5

Music City had profit of $43,000, net sales of $380,500 and average total assets of$220,000. Its profit margin and total asset turnover were respectively:

Accepted Answer

A)  19.5%; 11.3. 
B)  11.3%; 1.73. 
C)  11.3%; 19.5. 
D)  11.3%; 11.3. 
E)  1.73%; 19.5. 
A)  19.5%; 11.3. 
B)  11.3%; 1.73. 
C)  11.3%; 19.5. 
D)  11.3%; 11.3. 
E)  1.73%; 19.5.

Question 6

Total asset turnover measures:

Accepted Answer

A)  The quality of assets. 
B)  Liquidity. 
C)  Profitability. 
D)  The company's ability to use its assets to generate sales. 
E)  Both profitability and the company's ability to use its assets to generate sales. 
A)  The quality of assets. 
B)  Liquidity. 
C)  Profitability. 
D)  The company's ability to use its assets to generate sales. 
E)  Both profitability and the company's ability to use its assets to generate sales.

Question 7

A company must have less than 30 days' sales uncollected in order to have enough liquidity.

Accepted Answer

A) True 
 B)False

Question 8

Accounts payable turnover:

Accepted Answer

A)  Describes how much time it takes a company to meet its obligations to suppliers. 
B)  Is also called inventory turnover. 
C)  Describes how much time it takes a company to meet its obligations to suppliers and can be used to evaluate liquidity. 
D)  Can be used to evaluate liquidity. 
E)  All of these answers are correct. 
A)  Describes how much time it takes a company to meet its obligations to suppliers. 
B)  Is also called inventory turnover. 
C)  Describes how much time it takes a company to meet its obligations to suppliers and can be used to evaluate liquidity. 
D)  Can be used to evaluate liquidity. 
E)  All of these answers are correct.

Question 9

Times interest earned is calculated by:

Accepted Answer

A)  Dividing income before interest and income taxes by interest expense. 
B)  Dividing interest expense by income before interest. 
C)  Dividing interest expense by income before interest times interest. 
D)  Multiplying interest times income. 
E)  Dividing income before interest and income taxes by interest expense times interest. 
A)  Dividing income before interest and income taxes by interest expense. 
B)  Dividing interest expense by income before interest. 
C)  Dividing interest expense by income before interest times interest. 
D)  Multiplying interest times income. 
E)  Dividing income before interest and income taxes by interest expense times interest.

Question 10

Wonka Co. had cost of goods sold of $4,000 million, beginning inventory of $2,500 million and ending inventory of $1,500 million. The days' sales in inventory is:

Accepted Answer

A)  1,095. 
B)  182.5. 
C)  876. 
D)  136.8. 
E)  30.5. 
A)  1,095. 
B)  182.5. 
C)  876. 
D)  136.8. 
E)  30.5.

Question 11

The debt ratio is calculated by dividing total assets by total liabilities.

Accepted Answer

A) True 
 B)False

Question 12

A company should maintain a current ratio of two to one when:

Accepted Answer

A)  Inventory turns over frequently. 
B)  The company has little inventory. 
C)  The company grants little or no credit. 
D)  The company is selling low priced clothing. 
E)  Estimating customer demand is difficult. 
A)  Inventory turns over frequently. 
B)  The company has little inventory. 
C)  The company grants little or no credit. 
D)  The company is selling low priced clothing. 
E)  Estimating customer demand is difficult.

Question 13

Off the Record's quick assets are $127,000. With current liabilities of $143,000, Off the Record's acid-test ratio is 1.03 to 1.

Accepted Answer

A) True 
 B)False

Question 14

Liquidity refers to the availability of resources to meet short-term cash requirements.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is incorrect?

Accepted Answer

A)  Higher financial leverage involves higher risk. 
B)  Risk is higher if a company has higher assets. 
C)  Risk is higher if a company has more liabilities. 
D)  The debt ratio is used to measure financial risk. 
E)  Lower financial leverage involves lower risk. 
A)  Higher financial leverage involves higher risk. 
B)  Risk is higher if a company has higher assets. 
C)  Risk is higher if a company has more liabilities. 
D)  The debt ratio is used to measure financial risk. 
E)  Lower financial leverage involves lower risk.

Question 16

Comparative financial statements in which each amount is expressed as a percentage of a base amount, and in which the base amount is expressed as 100%, are called:

Accepted Answer

A)  Common-size comparative statements. 
B)  Comparative statements. 
C)  Index statements. 
D)  Base line statements. 
E)  General-purpose financial statements. 
A)  Common-size comparative statements. 
B)  Comparative statements. 
C)  Index statements. 
D)  Base line statements. 
E)  General-purpose financial statements.

Question 17

If the times interest earned ratio:

Accepted Answer

A)  Increases, risk decreases. 
B)  Is under 1.5, risk decreases. 
C)  Increases, risk increases. 
D)  Is over 1.5, risk increases. 
E)  Increases and/or is under 1.5, risk decreases. 
A)  Increases, risk decreases. 
B)  Is under 1.5, risk decreases. 
C)  Increases, risk increases. 
D)  Is over 1.5, risk increases. 
E)  Increases and/or is under 1.5, risk decreases.

Question 18

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

Accepted Answer

A) True 
 B)False

Question 19

GAP's earnings per share is $3.11. Its common dividend is $.36 per share and its market price is $40 per share. The dividend yield is 0.9%.

Accepted Answer

A) True 
 B)False

Question 20

Evaluation of company performance includes 1) past and current performance, 2) current financial position, and 3) future performance and risk.

Accepted Answer

A) True 
 B)False

Return on total assets measures:

Current assets minus current liabilities is called:

Accounts receivable turnover is calculated by:

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

Music City had profit of $43,000, net sales of $380,500 and average total assets of$220,000. Its profit margin and total asset turnover were respectively:

Total asset turnover measures:

A company must have less than 30 days' sales uncollected in order to have enough liquidity.

Accounts payable turnover:

Times interest earned is calculated by:

Wonka Co. had cost of goods sold of $4,000 million, beginning inventory of $2,500 million and ending inventory of $1,500 million. The days' sales in inventory is:

The debt ratio is calculated by dividing total assets by total liabilities.

A company should maintain a current ratio of two to one when:

Off the Record's quick assets are $127,000. With current liabilities of $143,000, Off the Record's acid-test ratio is 1.03 to 1.

Liquidity refers to the availability of resources to meet short-term cash requirements.

Which of the following statements is incorrect?

Comparative financial statements in which each amount is expressed as a percentage of a base amount, and in which the base amount is expressed as 100%, are called:

If the times interest earned ratio:

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

GAP's earnings per share is $3.11. Its common dividend is $.36 per share and its market price is $40 per share. The dividend yield is 0.9%.

Evaluation of company performance includes 1) past and current performance, 2) current financial position, and 3) future performance and risk.

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

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Exam 17: Analyzing Financial Statements

Return on total assets measures:

Current assets minus current liabilities is called:

Accounts receivable turnover is calculated by:

The annual amount of cash dividends per share distributed to common shareholders relative to the share's market price is called the:

Music City had profit of $43,000, net sales of $380,500 and average total assets of$220,000. Its profit margin and total asset turnover were respectively:

Total asset turnover measures:

A company must have less than 30 days' sales uncollected in order to have enough liquidity.

Accounts payable turnover:

Times interest earned is calculated by:

Wonka Co. had cost of goods sold of $4,000 million, beginning inventory of $2,500 million and ending inventory of $1,500 million. The days' sales in inventory is:

The debt ratio is calculated by dividing total assets by total liabilities.

A company should maintain a current ratio of two to one when:

Off the Record's quick assets are $127,000. With current liabilities of $143,000, Off the Record's acid-test ratio is 1.03 to 1.

Liquidity refers to the availability of resources to meet short-term cash requirements.

Which of the following statements is incorrect?

Comparative financial statements in which each amount is expressed as a percentage of a base amount, and in which the base amount is expressed as 100%, are called:

If the times interest earned ratio:

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

GAP's earnings per share is $3.11. Its common dividend is $.36 per share and its market price is $40 per share. The dividend yield is 0.9%.

Evaluation of company performance includes 1) past and current performance, 2) current financial position, and 3) future performance and risk.

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Filters