Exam 9: Managerial Accounting

The following amounts were taken from the financial statements of Ando Company: 2021 2020 Total assets \ 800,000 \ 1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 108,000 117,000 Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock \ 42 \ 39 The price-earnings ratio for 2021 is

If a company has sales of $130 in 2021 and $182 in 2020 the percentage decrease in sales from 2020 to 2021 is 40%.

Because pro forma earnings are based on specific rules these amounts are highly reliable.

A solvency ratio measures the income or operating success of a company for a given period of time.

A weakness of the current ratio is

Chodron Corporation had net credit sales of $13000000 and cost of goods sold of $9250000 for the year.The average inventory for the year amounted to $1250000.The average days in inventory during the year was approximately

Which of the following would not be considered an example of a discontinued operation?

Rama Company reported the following on its income statement: Income before income taxes \ 500,000 Income tax expense 150,000 Net income \ 350,000 An analysis of the income statement revealed that interest expense was $80000.Rama Company's times interest earned was

Chodron Corporation had net credit sales of $13000000 and cost of goods sold of $9250000 for the year.The average inventory for the year amounted to $1250000.The inventory turnover for the year is

Which situation below might indicate a company has a low quality of earnings?

A liquidity ratio measures the

Accounts receivable turnover is useful in assessing the profitability of receivables.

Reardon Inc.has an investment in trading securities of $140000.This investment experienced an unrealized loss of $7000 during the current year.Assuming a 35% tax rate the effect of this loss on comprehensive income will be

In a common size income statement each item is expressed as a percentage of net income.

The following information pertains to The Unique Boutique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. Assets Cash and short-term investments \ 4,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets \ 295,000 Liabilities and Stockholders' Equity Current liabilities \ 60,000 Long-term liabilities 85,000 Stockholders' equity-common 150,000 Total Liabilities and Stockholders' Equity \ 295,000 Income Statement \ 85,000 Coles revenue of goods sold 45,000 Gross margin 40,000 Operating expenses 20,000 Net income \ 20,000 Number of shares of common stock 6,000 Market price of common stock \ 20 Dividends per share on common stock 0.90 Cash provided by operations \ 30,000 What is the return on common stockholders' equity for this company?

Comprehensive income would not include

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?

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

In vertical analysis

In a common size balance sheet the 100 percent figure is