Question 1

The relative financial stability of two companies can be appraised by calculating and comparing:

Accepted Answer

A)  The earnings per share for each company. 
B)  The times interest earned for each company. 
C)  The return on investment for each company. 
D)  The inventory turnover for each company. 
E)  None of the above 
A)  The earnings per share for each company. 
B)  The times interest earned for each company. 
C)  The return on investment for each company. 
D)  The inventory turnover for each company. 
E)  None of the above B

Question 2

The Great Barrier Reef Coral Dive company reported EBIT of $30,000 and sales of $375,000 in 2010. Its asset base grew from $250,000 at the beginning of the year to $350,000 by 31st December 2010. What is its 2010 ROI?

Accepted Answer

A)  12% 
B)  8.57% 
C)  10% 
D)  8% 
E)  None of the above. 
A)  12% 
B)  8.57% 
C)  10% 
D)  8% 
E)  None of the above. C

Question 3

Which of the following statements is true about the current asset ratio?

Accepted Answer

A)  An increase in the accounts receivable turnover ratio will generally result in an increase in the current ratio. 
B)  The current asset ratio is calculated by deducting current liabilities from current assets. 
C)  The current asset ratio is widely used as an indicator of a company's long term liquidity. 
D)  If calculated correctly, the current asset ratio will always be greater than one. 
E)  The current asset ratio is calculated by dividing current assets by current liabilities. 
A)  An increase in the accounts receivable turnover ratio will generally result in an increase in the current ratio. 
B)  The current asset ratio is calculated by deducting current liabilities from current assets. 
C)  The current asset ratio is widely used as an indicator of a company's long term liquidity. 
D)  If calculated correctly, the current asset ratio will always be greater than one. 
E)  The current asset ratio is calculated by dividing current assets by current liabilities. E

Question 4

The relative profitability of two companies can be appraised by calculating and comparing:

Accepted Answer

A)  The earnings per share for each company. 
B)  The times interest earned for each company. 
C)  The return on investment for each company. 
D)  The current ratio for each company. 
E)  None of the above 
A)  The earnings per share for each company. 
B)  The times interest earned for each company. 
C)  The return on investment for each company. 
D)  The current ratio for each company. 
E)  None of the above

Question 5

Which of the following statements concerning Revpar is true?

Accepted Answer

A)  It is not as complete a measure of hotel performance as the widely-used average room rate. 
B)  It represents a useful gauge of a hotel's financial stability. 
C)  Revpar is calculated by dividing daily room letting revenue by the number of rooms sold. 
D)  If it is increasing in a hotel, the hotel's ROI must also be increasing. 
E)  Considered individually, it represents a more complete performance measure than average room rate or percentage room occupancy. 
A)  It is not as complete a measure of hotel performance as the widely-used average room rate. 
B)  It represents a useful gauge of a hotel's financial stability. 
C)  Revpar is calculated by dividing daily room letting revenue by the number of rooms sold. 
D)  If it is increasing in a hotel, the hotel's ROI must also be increasing. 
E)  Considered individually, it represents a more complete performance measure than average room rate or percentage room occupancy.

Question 6

Which of the following statements is true about the current asset ratio?

Accepted Answer

A)  An increase in the accounts receivable turnover ratio will generally result in an increase in the current ratio. 
B)  The current asset ratio is calculated by deducting current liabilities from current assets. 
C)  When calculating the current asset ratio, inventory should be deducted from other current assets. 
D)  If calculated correctly, the current asset ratio will always be greater than one. 
E)  None of the above statements concerning the current asset ratio is true. 
A)  An increase in the accounts receivable turnover ratio will generally result in an increase in the current ratio. 
B)  The current asset ratio is calculated by deducting current liabilities from current assets. 
C)  When calculating the current asset ratio, inventory should be deducted from other current assets. 
D)  If calculated correctly, the current asset ratio will always be greater than one. 
E)  None of the above statements concerning the current asset ratio is true.

Question 7

The current asset ratio is an indicator of a company's capacity to:

Accepted Answer

A)  Meet short-term debt obligations 
B)  Earn a strong rate of return 
C)  Cover long term debt obligations 
D)  Secure a strong short-term asset turnover 
E)  Earn the company's owners a good return in the short-term only. 
A)  Meet short-term debt obligations 
B)  Earn a strong rate of return 
C)  Cover long term debt obligations 
D)  Secure a strong short-term asset turnover 
E)  Earn the company's owners a good return in the short-term only.

Question 8

In its last financial year, the Dubbo Hotel reported net profit of $40,000, gross profit of $30,000, sales of $240,000 and average assets of $360,000. What was the hotel's gross profit margin?

Accepted Answer

A)  12.5%. 
B)  16.66%. 
C)  8.33%. 
D)  11.11%. 
E)  15%. 
A)  12.5%. 
B)  16.66%. 
C)  8.33%. 
D)  11.11%. 
E)  15%.

Question 9

Which of the following statements is untrue:

Accepted Answer

A)  The results of a ratio analysis convey limited information unless they are compared to some benchmark data. 
B)  ROI can be calculated in a range of ways that include: return on equity and return on assets available. 
C)  ROI can be dissected into two parts: profit margin and financial stability. 
D)  When calculating an asset turnover ratio, it is better to use an average of the asset balance through the year, rather than the asset balance at the end of the year. 
E)  An increase in inventory turnover does not always represent a desirable development. 
A)  The results of a ratio analysis convey limited information unless they are compared to some benchmark data. 
B)  ROI can be calculated in a range of ways that include: return on equity and return on assets available. 
C)  ROI can be dissected into two parts: profit margin and financial stability. 
D)  When calculating an asset turnover ratio, it is better to use an average of the asset balance through the year, rather than the asset balance at the end of the year. 
E)  An increase in inventory turnover does not always represent a desirable development.

Question 10

Which of the following statements is true?

Accepted Answer

A)  An excess of inventory will lead to a high current asset ratio figure. 
B)  An increasing inventory turnover signifies a reducing number of days inventory is held. 
C)  If inventory prices are declining inventory turnover will tend to decrease. 
D)  All of the above are true. 
E)  A and B are true. 
A)  An excess of inventory will lead to a high current asset ratio figure. 
B)  An increasing inventory turnover signifies a reducing number of days inventory is held. 
C)  If inventory prices are declining inventory turnover will tend to decrease. 
D)  All of the above are true. 
E)  A and B are true.

Question 11

In the most recent year, Byron Bay Events financial statements reported net profit of $70,000 after deducting interest expense of $20,000 and income tax of $30,000. The company liabilities are $400,000 and its owner's equity is $800,000. What is the hotel's return on total assets, before interest and tax?

Accepted Answer

A)  7.5% 
B)  8.75% 
C)  11.25% 
D)  12% 
E)  10% 
A)  7.5% 
B)  8.75% 
C)  11.25% 
D)  12% 
E)  10%

Question 12

The debt to equity ratio is an indicator of:

Accepted Answer

A)  A company's capacity to use debt to lever up returns to equity holder holders. 
B)  The extent equity funds are drawn upon to pay off debt. 
C)  The amount paid to debt holders relative to the returns earned by equity holders. 
D)  The long-term indebtedness of a company. 
E)  None of the above. 
A)  A company's capacity to use debt to lever up returns to equity holder holders. 
B)  The extent equity funds are drawn upon to pay off debt. 
C)  The amount paid to debt holders relative to the returns earned by equity holders. 
D)  The long-term indebtedness of a company. 
E)  None of the above.

Question 13

Which of the following contributes to a higher ROI?

Accepted Answer

A)  Increasing number of days to collect accounts receivable 
B)  Increasing total asset turnover ratio 
C)  Increasing accounts receivable 
D)  Stable gross profit margin 
E)  Decreasing inventory turnover. 
A)  Increasing number of days to collect accounts receivable 
B)  Increasing total asset turnover ratio 
C)  Increasing accounts receivable 
D)  Stable gross profit margin 
E)  Decreasing inventory turnover.

Question 14

Which of the following statements regarding gross profit is correct?

Accepted Answer

A)  A reduction in gross profit margin will positively affect net profit margin. 
B)  Gross profit is calculated as revenue less variable expenses. 
C)  Gross profit is calculated as revenue less direct costs. 
D)  Any change in the gross profit margin can have a significant effect on the net profit margin. 
E)  A decline in total sales will reduce the gross profit margin. 
A)  A reduction in gross profit margin will positively affect net profit margin. 
B)  Gross profit is calculated as revenue less variable expenses. 
C)  Gross profit is calculated as revenue less direct costs. 
D)  Any change in the gross profit margin can have a significant effect on the net profit margin. 
E)  A decline in total sales will reduce the gross profit margin.

Question 15

The current asset ratio is an indicator of a company's capacity to:

Accepted Answer

A)  Meet short-term debt obligations 
B)  Earn a strong rate of return 
C)  Cover long term debt obligations 
D)  Secure a strong short-term asset turnover 
E)  Earn the company's owners a good return in the short-term only. 
A)  Meet short-term debt obligations 
B)  Earn a strong rate of return 
C)  Cover long term debt obligations 
D)  Secure a strong short-term asset turnover 
E)  Earn the company's owners a good return in the short-term only.

Question 16

Which of the following computations would provide a measure of a hotel's average room rate for a month?

Accepted Answer

A)  Total letting revenue for the month / daily average rooms available. 
B)  Total letting revenue for the month /number of rooms sold in the month. 
C)  Total letting revenue for the month / total rooms available during the month. 
D)  Total letting revenue for the month /daily average rooms sold during the month. 
E)  Total letting revenue for the month / average room letting revenue during the month. 
A)  Total letting revenue for the month / daily average rooms available. 
B)  Total letting revenue for the month /number of rooms sold in the month. 
C)  Total letting revenue for the month / total rooms available during the month. 
D)  Total letting revenue for the month /daily average rooms sold during the month. 
E)  Total letting revenue for the month / average room letting revenue during the month.

Question 17

Which of the following contributes to a higher ROI:

Accepted Answer

A)  Increasing number of days to collect accounts receivable 
B)  Decreasing total asset turnover ratio 
C)  Decreasing debt to assets ratio 
D)  Stable gross profit margin 
E)  Increasing inventory turnover. 
A)  Increasing number of days to collect accounts receivable 
B)  Decreasing total asset turnover ratio 
C)  Decreasing debt to assets ratio 
D)  Stable gross profit margin 
E)  Increasing inventory turnover.

Question 18

Which of the following impacts on the profit margin or asset turnover elements that comprise the ROI 'Dupont formula'?

Accepted Answer

A)  Earnings per share 
B)  Debt to assets ratio 
C)  Inventory turnover 
D)  Current asset ratio 
E)  Times interest earned 
A)  Earnings per share 
B)  Debt to assets ratio 
C)  Inventory turnover 
D)  Current asset ratio 
E)  Times interest earned

Question 19

An appraisal of a company's long term financial stability relative to a second company's long term financial stability can be achieved by:

Accepted Answer

A)  Determining each company's trend in paying dividends 
B)  Comparing each company's earnings before interest (EBIT) trend 
C)  Calculating each company's current asset ratio 
D)  Calculating each company's debt to equity ratio 
E)  Comparing the total asset turnover for the two companies. 
A)  Determining each company's trend in paying dividends 
B)  Comparing each company's earnings before interest (EBIT) trend 
C)  Calculating each company's current asset ratio 
D)  Calculating each company's debt to equity ratio 
E)  Comparing the total asset turnover for the two companies.

Question 20

Which of the following contributes to a higher ROI for a business?

Accepted Answer

A)  A decreasing debt to assets ratio 
B)  An increase in sales while holding costs constant 
C)  A decreasing inventory turnover 
D)  Increasing number of days to collect accounts receivable 
E)  A decrease in the times interest earned ratio 
A)  A decreasing debt to assets ratio 
B)  An increase in sales while holding costs constant 
C)  A decreasing inventory turnover 
D)  Increasing number of days to collect accounts receivable 
E)  A decrease in the times interest earned ratio

The relative financial stability of two companies can be appraised by calculating and comparing:

The Great Barrier Reef Coral Dive company reported EBIT of $30,000 and sales of $375,000 in 2010. Its asset base grew from $250,000 at the beginning of the year to $350,000 by 31^st December 2010. What is its 2010 ROI?

Which of the following statements is true about the current asset ratio?

The relative profitability of two companies can be appraised by calculating and comparing:

Which of the following statements concerning Revpar is true?

Which of the following statements is true about the current asset ratio?

The current asset ratio is an indicator of a company's capacity to:

In its last financial year, the Dubbo Hotel reported net profit of $40,000, gross profit of $30,000, sales of $240,000 and average assets of $360,000. What was the hotel's gross profit margin?

Which of the following statements is untrue:

Which of the following statements is true?

The debt to equity ratio is an indicator of:

Which of the following contributes to a higher ROI?

Which of the following statements regarding gross profit is correct?

The current asset ratio is an indicator of a company's capacity to:

Which of the following computations would provide a measure of a hotel's average room rate for a month?

Which of the following contributes to a higher ROI:

Which of the following impacts on the profit margin or asset turnover elements that comprise the ROI 'Dupont formula'?

An appraisal of a company's long term financial stability relative to a second company's long term financial stability can be achieved by:

Which of the following contributes to a higher ROI for a business?

Introduction: Hospitality Decision Makers Use of Accounting

Analysing Transactions and Preparing Year End Financial Statements

Double Entry Accounting

Adjusting and Closing Entries

Internal Control

Cost Management Issues

Cost-Volume-Profit Analysis

Budgeting and Responsibility Accounting

Flexible Budgeting and Variance Analysis

Performance Measurement

Cost Information and Pricing

Working Capital Management

Investment Decision Making

Other Managerial Finance Issues

Revenue Management

Filters

Exam 5: Financial Statement Analysis

The relative financial stability of two companies can be appraised by calculating and comparing:

The Great Barrier Reef Coral Dive company reported EBIT of $30,000 and sales of $375,000 in 2010. Its asset base grew from $250,000 at the beginning of the year to $350,000 by 31st December 2010. What is its 2010 ROI?

Which of the following statements is true about the current asset ratio?

The relative profitability of two companies can be appraised by calculating and comparing:

Which of the following statements concerning Revpar is true?

Which of the following statements is true about the current asset ratio?

The current asset ratio is an indicator of a company's capacity to:

In its last financial year, the Dubbo Hotel reported net profit of $40,000, gross profit of $30,000, sales of $240,000 and average assets of $360,000. What was the hotel's gross profit margin?

Which of the following statements is untrue:

Which of the following statements is true?

The debt to equity ratio is an indicator of:

Which of the following contributes to a higher ROI?

Which of the following statements regarding gross profit is correct?

The current asset ratio is an indicator of a company's capacity to:

Which of the following computations would provide a measure of a hotel's average room rate for a month?

Which of the following contributes to a higher ROI:

Which of the following impacts on the profit margin or asset turnover elements that comprise the ROI 'Dupont formula'?

An appraisal of a company's long term financial stability relative to a second company's long term financial stability can be achieved by:

Which of the following contributes to a higher ROI for a business?

Introduction: Hospitality Decision Makers Use of Accounting

Analysing Transactions and Preparing Year End Financial Statements

Double Entry Accounting

Adjusting and Closing Entries

Internal Control

Cost Management Issues

Cost-Volume-Profit Analysis

Budgeting and Responsibility Accounting

Flexible Budgeting and Variance Analysis

Performance Measurement

Cost Information and Pricing

Working Capital Management

Investment Decision Making

Other Managerial Finance Issues

Revenue Management

Filters

The Great Barrier Reef Coral Dive company reported EBIT of $30,000 and sales of $375,000 in 2010. Its asset base grew from $250,000 at the beginning of the year to $350,000 by 31^st December 2010. What is its 2010 ROI?