Question 1

Needle Co. had net sales of $28 million, cost of goods sold of $16 million, and profit of$8 million. Its gross margin ratio was 3.4%.

Accepted Answer

A) True 
 B)False

Question 2

Accounts payable turnover is a measure of liquidity.

Accepted Answer

A) True 
 B)False

Question 3

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000. The firm's total liabilities are $425,000. Thepledged assets to secured liabilities is:

Accepted Answer

A)  1.4. 
B)  1.3. 
C)  2.2. 
D)  1.7. 
E)  1.1. 
A)  1.4. 
B)  1.3. 
C)  2.2. 
D)  1.7. 
E)  1.1.

Question 4

Tools using key relationships among financial statement items are:

Accepted Answer

A)  Vertical analysis. 
B)  Investment analysis. 
C)  Financial analysis. 
D)  Ratio analysis. 
E)  Horizontal analysis. 
A)  Vertical analysis. 
B)  Investment analysis. 
C)  Financial analysis. 
D)  Ratio analysis. 
E)  Horizontal analysis.

Question 5

The gross margin ratio:

Accepted Answer

A)  Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
B)  Is also called the profit margin ratio. 
C)  Is also called the gross profit ratio and measures a merchandising firm's ability to earn a profit from the sale of inventory 
D)  Is also called the gross profit ratio. 
E)  Measures a merchandising firm's ability to earn a profit from the sale of inventory and is also called profit margin ratio. 
A)  Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
B)  Is also called the profit margin ratio. 
C)  Is also called the gross profit ratio and measures a merchandising firm's ability to earn a profit from the sale of inventory 
D)  Is also called the gross profit ratio. 
E)  Measures a merchandising firm's ability to earn a profit from the sale of inventory and is also called profit margin ratio.

Question 6

Houston Co. had net sales of $186,000 and average total assets of $173,000. Its total asset turnover was 1.08.

Accepted Answer

A) True 
 B)False

Question 7

The merchandise turnover ratio is calculated by dividing average merchandise inventory by cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

A cash purchase of merchandise inventory will:

Accepted Answer

A)  Decrease the acid test ratio 
B)  Increase the merchandise inventory ratio 
C)  Increase the acid test ratio 
D)  Increase the current ratio 
E)  Decrease the current ratio 
A)  Decrease the acid test ratio 
B)  Increase the merchandise inventory ratio 
C)  Increase the acid test ratio 
D)  Increase the current ratio 
E)  Decrease the current ratio

Question 9

West Coast Kids had cost of goods sold of $3,000 million, ending inventory of $1,500 million, and average inventory of $1,000 million. The merchandise turnover is:

Accepted Answer

A)  2. 
B)  .42. 
C)  12. 
D)  .33. 
E)  3. 
A)  2. 
B)  .42. 
C)  12. 
D)  .33. 
E)  3.

Question 10

Profit margin is:

Accepted Answer

A)  Profit divided by sales. 
B)  Profit divided by assets. 
C)  Revenues divided by sales. 
D)  Sales divided by assets. 
E)  Revenues divided by assets. 
A)  Profit divided by sales. 
B)  Profit divided by assets. 
C)  Revenues divided by sales. 
D)  Sales divided by assets. 
E)  Revenues divided by assets.

Question 11

Maggis has current assets of $19,000 and current liabilities of $9,500. Its current ratio is1.6 to 1.

Accepted Answer

A) True 
 B)False

Question 12

The gross margin ratio is gross profit divided by net sales.

Accepted Answer

A) True 
 B)False

Question 13

The acid-test ratio is also called the quick ratio.

Accepted Answer

A) True 
 B)False

Question 14

Quick assets include cash, inventory, and receivables.

Accepted Answer

A) True 
 B)False

Question 15

Profit margin measures the relationship of debt to assets.

Accepted Answer

A) True 
 B)False

Question 16

Power Co. had $750,000 in accounts receivable and $2,800,000 in net sales for the period. Its days' sales uncollected was 29.8.

Accepted Answer

A) True 
 B)False

Question 17

Quantum's earnings per share is $2.47. The dividend per share is $.25 and the market price per share is $45. The price-earnings ratio is 5.5.

Accepted Answer

A) True 
 B)False

Question 18

External users of financial information:

Accepted Answer

A)  Are those individuals involved in managing and operating the company. 
B)  Make operating decisions for a company. 
C)  Are not directly involved in running the company. 
D)  Include internal auditors and consultants. 
E)  Make strategic decisions for a company. 
A)  Are those individuals involved in managing and operating the company. 
B)  Make operating decisions for a company. 
C)  Are not directly involved in running the company. 
D)  Include internal auditors and consultants. 
E)  Make strategic decisions for a company.

Question 19

Ratios, like other analytical tools, are usually historically oriented.

Accepted Answer

A) True 
 B)False

Question 20

Chicago Company's cost of goods sold was $19,250. Its average merchandise inventory was $4,575. Its merchandise turnover was 4.2.

Accepted Answer

A) True 
 B)False

Needle Co. had net sales of $28 million, cost of goods sold of $16 million, and profit of$8 million. Its gross margin ratio was 3.4%.

Accounts payable turnover is a measure of liquidity.

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000. The firm's total liabilities are $425,000. Thepledged assets to secured liabilities is:

Tools using key relationships among financial statement items are:

The gross margin ratio:

Houston Co. had net sales of $186,000 and average total assets of $173,000. Its total asset turnover was 1.08.

The merchandise turnover ratio is calculated by dividing average merchandise inventory by cost of goods sold.

A cash purchase of merchandise inventory will:

West Coast Kids had cost of goods sold of $3,000 million, ending inventory of $1,500 million, and average inventory of $1,000 million. The merchandise turnover is:

Profit margin is:

Maggis has current assets of $19,000 and current liabilities of $9,500. Its current ratio is1.6 to 1.

The gross margin ratio is gross profit divided by net sales.

The acid-test ratio is also called the quick ratio.

Quick assets include cash, inventory, and receivables.

Profit margin measures the relationship of debt to assets.

Power Co. had $750,000 in accounts receivable and $2,800,000 in net sales for the period. Its days' sales uncollected was 29.8.

Quantum's earnings per share is $2.47. The dividend per share is $.25 and the market price per share is $45. The price-earnings ratio is 5.5.

External users of financial information:

Ratios, like other analytical tools, are usually historically oriented.

Chicago Company's cost of goods sold was $19,250. Its average merchandise inventory was $4,575. Its merchandise turnover was 4.2.

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

Exam 17: Analyzing Financial Statements

Needle Co. had net sales of $28 million, cost of goods sold of $16 million, and profit of$8 million. Its gross margin ratio was 3.4%.

Accounts payable turnover is a measure of liquidity.

The book value of a firm's total assets is $550,000 and it has pledged $500,000 of those assets to secure a loan of $450,000. The firm's total liabilities are $425,000. Thepledged assets to secured liabilities is:

Tools using key relationships among financial statement items are:

The gross margin ratio:

Houston Co. had net sales of $186,000 and average total assets of $173,000. Its total asset turnover was 1.08.

The merchandise turnover ratio is calculated by dividing average merchandise inventory by cost of goods sold.

A cash purchase of merchandise inventory will:

West Coast Kids had cost of goods sold of $3,000 million, ending inventory of $1,500 million, and average inventory of $1,000 million. The merchandise turnover is:

Profit margin is:

Maggis has current assets of $19,000 and current liabilities of $9,500. Its current ratio is1.6 to 1.

The gross margin ratio is gross profit divided by net sales.

The acid-test ratio is also called the quick ratio.

Quick assets include cash, inventory, and receivables.

Profit margin measures the relationship of debt to assets.

Power Co. had $750,000 in accounts receivable and $2,800,000 in net sales for the period. Its days' sales uncollected was 29.8.

Quantum's earnings per share is $2.47. The dividend per share is $.25 and the market price per share is $45. The price-earnings ratio is 5.5.

External users of financial information:

Ratios, like other analytical tools, are usually historically oriented.

Chicago Company's cost of goods sold was $19,250. Its average merchandise inventory was $4,575. Its merchandise turnover was 4.2.

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