Question 1

Intercompany comparison refers to comparison with other companies to provide insight into competitive position.

Accepted Answer

A) True 
 B)False  True

Question 2

Here is selected information for Phillips Inc. Use this information to answer the questions below.
Round each answer to one decimal place.
  
-Calculate the gross profit margin for 2014. ______________________
Calculate the gross profit margin for 2015. ______________________
Comment on the change____________________________

Accepted Answer

2014: (5200 - 4200) ÷ 5200 = 19.2%
2015: (5400 - 4400) ÷ 5400 = 18.5%
There has been a decrease in gross profit margin from the previous year indicating an unfavourable trend in profitability. However, other profitability ratios need to be consulted as well.

Question 3

Here is selected information for Phillips Inc. Use this information to answer the questions below.
Round each answer to one decimal place.
  
-Calculate the current ratio for 2015. ______________________

Accepted Answer

1.26$\quad$$\quad$ $1,200 ÷ $950 = 1.26

Question 4

Gross profit margin, asset turnover, and return on equity are profitability ratios.

Accepted Answer

A) True 
 B)False

Question 5

A base year is selected when performing horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 6

The Operating Cycle:

Accepted Answer

A)  Represents the number of days to purchase inventory 
B)  Measures liquidity of inventory. 
C)  Measures the number of days receivables are outstanding 
D)  Increases as the collection period increases. 
A)  Represents the number of days to purchase inventory 
B)  Measures liquidity of inventory. 
C)  Measures the number of days receivables are outstanding 
D)  Increases as the collection period increases.

Question 7

Here is selected information for Phillips Inc. Use this information to answer the questions below.
Round each answer to one decimal place.
  
-Calculate the collection period for 2015. ______________________

Accepted Answer

19.6 days@#LAT-DLM&@#LAT-DLM& $5,400 ÷ [

Question 8

The formula for calculating the interest coverage ratio is profit before income tax expense and interest expense divided by interest expense.

Accepted Answer

A) True 
 B)False

Question 9

List two ratios that are used to evaluate liquidity.

Accepted Answer

Any two of the following:
1. C

Question 10

All of the formulas are correct except:

Accepted Answer

A)  Receivables Turnover = Net Credit Sales ÷ Average Gross Receivables. 
B)  Asset turnover = Net Sales ÷ Average Total Assets. 
C)  Current Ratio = Current Liabilities ÷ Current Assets. 
D)  Payout Ratio = Cash Dividends ÷ Profit. 
A)  Receivables Turnover = Net Credit Sales ÷ Average Gross Receivables. 
B)  Asset turnover = Net Sales ÷ Average Total Assets. 
C)  Current Ratio = Current Liabilities ÷ Current Assets. 
D)  Payout Ratio = Cash Dividends ÷ Profit.

Question 11

Earnings per share:

Accepted Answer

A)  is calculated by dividing profit by the number of common share issued in the year 
B)  is a measure of the profit earned on each common share 
C)  is not presented on the income statement for publicly traded companies 
D)  is a measure of profit earned on each preferred share 
A)  is calculated by dividing profit by the number of common share issued in the year 
B)  is a measure of the profit earned on each common share 
C)  is not presented on the income statement for publicly traded companies 
D)  is a measure of profit earned on each preferred share

Question 12

Here is selected information for Phillips Inc. Use this information to answer the questions below.
Round each answer to one decimal place.
  
-Calculate the working capital for 2015. ______________________

Accepted Answer

$250 @#LAT-DLM&@#LAT-DLM& $1,2

Question 13

Here is selected information for Phillips Inc. Use this information to answer the questions below.
Round each answer to one decimal place.
  
-Calculate the inventory turnover for 2014. ______________________

Accepted Answer

10.1 times

Question 14

The payout ratio is a reflection of investor's assessments of a company's future profits.

Accepted Answer

A) True 
 B)False

Question 15

Earnings per share is reported for both common and preferred shares.

Accepted Answer

A) True 
 B)False

Question 16

Net credit sales are $4,000,000 and average gross receivables are $250,000. The collection period is:

Accepted Answer

A)  16 times. 
B)  6.25 percent. 
C)  16 days. 
D)  22.8 days. 
A)  16 times. 
B)  6.25 percent. 
C)  16 days. 
D)  22.8 days.

Question 17

Vertical analysis expresses all income statement items as a percentage of profit.

Accepted Answer

A) True 
 B)False

Question 18

Current ratio, receivables turnover, and inventory turnover, are measures of solvency.

Accepted Answer

A) True 
 B)False

Question 19

Sales (in millions) for a three-year period are: Year 1 $4.0, Year 2 $4.6, and Year 3 $5.0. Using Year 1 as the base year, sales in Years 2 and 3 expressed as a percentage of the base year sales are, respectively:

Accepted Answer

A)  115% and 125%. 
B)  115% and 109%. 
C)  15% and 25%. 
D)  87% and 80%. 
A)  115% and 125%. 
B)  115% and 109%. 
C)  15% and 25%. 
D)  87% and 80%.

Intercompany comparison refers to comparison with other companies to provide insight into competitive position.

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the gross profit margin for 2014. Calculate the gross profit margin for 2015. Comment on the change________

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the current ratio for 2015. ______________________

Gross profit margin, asset turnover, and return on equity are profitability ratios.

A base year is selected when performing horizontal analysis.

The Operating Cycle:

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the collection period for 2015. ______________________

The formula for calculating the interest coverage ratio is profit before income tax expense and interest expense divided by interest expense.

List two ratios that are used to evaluate liquidity.

All of the formulas are correct except:

Earnings per share:

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the working capital for 2015. ______________________

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the inventory turnover for 2014. ______________________

The payout ratio is a reflection of investor's assessments of a company's future profits.

Earnings per share is reported for both common and preferred shares.

Net credit sales are $4,000,000 and average gross receivables are $250,000. The collection period is:

Vertical analysis expresses all income statement items as a percentage of profit.

Current ratio, receivables turnover, and inventory turnover, are measures of solvency.

Sales (in millions) for a three-year period are: Year 1 $4.0, Year 2 $4.6, and Year 3 $5.0. Using Year 1 as the base year, sales in Years 2 and 3 expressed as a percentage of the base year sales are, respectively:

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Filters

Exam 17: Financial Statement Analysis

Intercompany comparison refers to comparison with other companies to provide insight into competitive position.

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the current ratio for 2015. ______________________

Gross profit margin, asset turnover, and return on equity are profitability ratios.

A base year is selected when performing horizontal analysis.

The Operating Cycle:

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the collection period for 2015. ______________________

The formula for calculating the interest coverage ratio is profit before income tax expense and interest expense divided by interest expense.

List two ratios that are used to evaluate liquidity.

All of the formulas are correct except:

Earnings per share:

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the working capital for 2015. ______________________

Here is selected information for Phillips Inc. Use this information to answer the questions below. Round each answer to one decimal place. -Calculate the inventory turnover for 2014. ______________________

The payout ratio is a reflection of investor's assessments of a company's future profits.

Earnings per share is reported for both common and preferred shares.

Net credit sales are $4,000,000 and average gross receivables are $250,000. The collection period is:

Vertical analysis expresses all income statement items as a percentage of profit.

Current ratio, receivables turnover, and inventory turnover, are measures of solvency.

Sales (in millions) for a three-year period are: Year 1 $4.0, Year 2 $4.6, and Year 3 $5.0. Using Year 1 as the base year, sales in Years 2 and 3 expressed as a percentage of the base year sales are, respectively:

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Filters