Question 1

Because of its relationship to dividends and market price, which ratio is important to investors?

Accepted Answer

A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price/earnings ratio 
D)  Asset turnover ratio 
A)  Current ratio 
B)  Debt-to-equity ratio 
C)  Price/earnings ratio 
D)  Asset turnover ratio

Question 2

Indicate the type of each ratio listed below.
-Debt-to-equity ratio

Accepted Answer

A) Liquidity ratio 
B) Solvency ratio 
C) Profitability ratio 
A) Liquidity ratio 
B) Solvency ratio 
C) Profitability ratio

Question 3

Auto Industries Company reported the following on its income statement:   If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned
Ratio?

Accepted Answer

A)  5 times 
B)  8 times 
C)  5.25 times 
D)  6.25 times 
A)  5 times 
B)  8 times 
C)  5.25 times 
D)  6.25 times

Question 4

The base, or benchmark, on which all items on the income statement are compared is net sales.

Accepted Answer

A) True 
 B)False

Question 5

The return on assets ratio

Accepted Answer

A)  considers the investment made by all creditors and stockholders. 
B)  is a measure of the liquidity of a company. 
C)  is based on average stockholders' equity as compared to net income for the period. 
D)  reflects investments made only by the creditors of a company. 
A)  considers the investment made by all creditors and stockholders. 
B)  is a measure of the liquidity of a company. 
C)  is based on average stockholders' equity as compared to net income for the period. 
D)  reflects investments made only by the creditors of a company.

Question 6

Given below are several ratios. Select the accounts or amounts that would be used in order to calculate the ratio. You will have more than one response to each ratio. Some accounts or amounts may not be used at all. Select all that apply.
-Dividend yield ratio

Accepted Answer

A)  Market price per share 
B)  Net sales 
C)  Average inventory outstanding 
D)  Interest expense, net of tax 
E)  Common dividends per share
F) Preferred dividends per share
G) Weighted average number of common shares outstanding
H) Total stockholders' equity 
A)  Market price per share 
B)  Net sales 
C)  Average inventory outstanding 
D)  Interest expense, net of tax 
E)  Common dividends per share
F) Preferred dividends per share
G) Weighted average number of common shares outstanding
H) Total stockholders' equity

Question 7

What is the minimum number of years for which publicly traded companies must include the following statements in their annual report filed with the SEC?

Accepted Answer

The answer of What is the minimum number of years...

Question 8

Dividends to preferred stockholders are deducted from net income when calculating the return on common stockholders' equity ratio because

Accepted Answer

A)  dividends are not an expense on the income statement. 
B)  the ratio is an indicator of the return on "common" stockholders' equity, not the return on preferred stock. 
C)  dividends are only available for distribution to common stockholders. 
D)  conservatism indicates that shareholders prefer a smaller numerator. 
A)  dividends are not an expense on the income statement. 
B)  the ratio is an indicator of the return on "common" stockholders' equity, not the return on preferred stock. 
C)  dividends are only available for distribution to common stockholders. 
D)  conservatism indicates that shareholders prefer a smaller numerator.

Question 9

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is:
___________________.

Accepted Answer

The answer of In a vertical analysis, the base, or...

Question 10

Treetop Company paid off a $100,000 two-year note payable. The effect of this transaction is that the

Accepted Answer

A)  earnings per share increased. 
B)  current ratio decreased. 
C)  debt-to-equity ratio increased. 
D)  debt-to-equity ratio decreased. 
A)  earnings per share increased. 
B)  current ratio decreased. 
C)  debt-to-equity ratio increased. 
D)  debt-to-equity ratio decreased.

Question 11

Apple Company had terms of net 60 days for customers. The number of days' sales in accounts receivable for Apple was 42 days. Apple is efficient in the collection of its receivables.

Accepted Answer

A) True 
 B)False

Question 12

For each of the following sentences, select the phrase or group of words that best completes the statement.
-The relationship between dividends and the market price of a company's stock.

Accepted Answer

A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio 
A) Earnings per share 
B) Dividend yield ratio 
C) Dividend payout ratio 
D) Leverage 
E) Return on assets ratio
F)Return on common stockholders' equity ratio
G)Debt-to-equity ratio
H)Price/earnings ratio

Question 13

Assume the current ratio for Horizon Surf Supplies is 2 to 1. If the company purchased supplies on credit, the effect of this transaction is to:

Accepted Answer

A)  increase the current ratio 
B)  decrease the current ratio 
C)  have no effect on the current ratio 
D)  decrease cash 
A)  increase the current ratio 
B)  decrease the current ratio 
C)  have no effect on the current ratio 
D)  decrease cash

Question 14

-Refer to the data for Computech Industries. Based on this information, what is Computech's number of days' sales in inventory assuming a 360 day year?

Accepted Answer

A)  132 days 
B)  216 days 
C)  1,091 days 
D)  120 days 
A)  132 days 
B)  216 days 
C)  1,091 days 
D)  120 days

Question 15

Your supervisor asks you to compare the company's results for the year, as measured by various ratios, with one of the published surveys that arranges information by industry classification. What difficulties might you encounter when making comparisons using industry standards?

Accepted Answer

Published financial statements, as well

Question 16

Indicate the type of each ratio listed below.
-Current ratio

Accepted Answer

A) Liquidity ratio 
B) Solvency ratio 
C) Profitability ratio 
A) Liquidity ratio 
B) Solvency ratio 
C) Profitability ratio

Question 17

If Mussel Company has working capital of $540,000 and a current ratio of 3 to 1, the amount of current assets is:

Accepted Answer

A)  $540,000 
B)  $810,000 
C)  $270,000 
D)  $405,000 
A)  $540,000 
B)  $810,000 
C)  $270,000 
D)  $405,000

Question 18

What would be at least three reasons for a decrease in inventory turnover? Explain.

Accepted Answer

One possible explanation for a decrease

Question 19

What situations could cause a decrease in the current ratio, but an increase in the acid-test ratio? If this happens, is management to be commended or is a problem evident? Explain

Accepted Answer

The current ratio is comprised of curren

Question 20

Select the term below most properly satisfies each statement.
-When using vertical analysis, accounts on the balance sheet should be stated as a percentage of this amount

Accepted Answer

A) Total assets 
B) Horizontal analysis 
C) Vertical analysis 
D) Net sales 
A) Total assets 
B) Horizontal analysis 
C) Vertical analysis 
D) Net sales

Because of its relationship to dividends and market price, which ratio is important to investors?

Indicate the type of each ratio listed below. -Debt-to-equity ratio

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned Ratio?

The base, or benchmark, on which all items on the income statement are compared is net sales.

The return on assets ratio

Given below are several ratios. Select the accounts or amounts that would be used in order to calculate the ratio. You will have more than one response to each ratio. Some accounts or amounts may not be used at all. Select all that apply. -Dividend yield ratio

What is the minimum number of years for which publicly traded companies must include the following statements in their annual report filed with the SEC?

Dividends to preferred stockholders are deducted from net income when calculating the return on common stockholders' equity ratio because

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

Treetop Company paid off a $100,000 two-year note payable. The effect of this transaction is that the

Apple Company had terms of net 60 days for customers. The number of days' sales in accounts receivable for Apple was 42 days. Apple is efficient in the collection of its receivables.

For each of the following sentences, select the phrase or group of words that best completes the statement. -The relationship between dividends and the market price of a company's stock.

Assume the current ratio for Horizon Surf Supplies is 2 to 1. If the company purchased supplies on credit, the effect of this transaction is to:

-Refer to the data for Computech Industries. Based on this information, what is Computech's number of days' sales in inventory assuming a 360 day year?

Your supervisor asks you to compare the company's results for the year, as measured by various ratios, with one of the published surveys that arranges information by industry classification. What difficulties might you encounter when making comparisons using industry standards?

Indicate the type of each ratio listed below. -Current ratio

If Mussel Company has working capital of $540,000 and a current ratio of 3 to 1, the amount of current assets is:

What would be at least three reasons for a decrease in inventory turnover? Explain.

What situations could cause a decrease in the current ratio, but an increase in the acid-test ratio? If this happens, is management to be commended or is a problem evident? Explain

Select the term below most properly satisfies each statement. -When using vertical analysis, accounts on the balance sheet should be stated as a percentage of this amount

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International-Financial-Reporting-Standards

Filters

Exam 13: Financial Statement Analysis

Because of its relationship to dividends and market price, which ratio is important to investors?

Indicate the type of each ratio listed below. -Debt-to-equity ratio

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned Ratio?

The base, or benchmark, on which all items on the income statement are compared is net sales.

The return on assets ratio

Given below are several ratios. Select the accounts or amounts that would be used in order to calculate the ratio. You will have more than one response to each ratio. Some accounts or amounts may not be used at all. Select all that apply. -Dividend yield ratio

What is the minimum number of years for which publicly traded companies must include the following statements in their annual report filed with the SEC?

Dividends to preferred stockholders are deducted from net income when calculating the return on common stockholders' equity ratio because

In a vertical analysis, the base, or benchmark, on which all other items in the income statement are compared is: ___________________.

Treetop Company paid off a $100,000 two-year note payable. The effect of this transaction is that the

Apple Company had terms of net 60 days for customers. The number of days' sales in accounts receivable for Apple was 42 days. Apple is efficient in the collection of its receivables.

For each of the following sentences, select the phrase or group of words that best completes the statement. -The relationship between dividends and the market price of a company's stock.

Assume the current ratio for Horizon Surf Supplies is 2 to 1. If the company purchased supplies on credit, the effect of this transaction is to:

-Refer to the data for Computech Industries. Based on this information, what is Computech's number of days' sales in inventory assuming a 360 day year?

Your supervisor asks you to compare the company's results for the year, as measured by various ratios, with one of the published surveys that arranges information by industry classification. What difficulties might you encounter when making comparisons using industry standards?

Indicate the type of each ratio listed below. -Current ratio

If Mussel Company has working capital of $540,000 and a current ratio of 3 to 1, the amount of current assets is:

What would be at least three reasons for a decrease in inventory turnover? Explain.

What situations could cause a decrease in the current ratio, but an increase in the acid-test ratio? If this happens, is management to be commended or is a problem evident? Explain

Select the term below most properly satisfies each statement. -When using vertical analysis, accounts on the balance sheet should be stated as a percentage of this amount

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

International-Financial-Reporting-Standards

Filters