Question 1

Which of the following is calculated by dividing net income by revenues?

Accepted Answer

A)  Gross profit margin 
B)  Current ratio 
C)  Net profit margin 
D)  Asset turnover 
A)  Gross profit margin 
B)  Current ratio 
C)  Net profit margin 
D)  Asset turnover

Question 2

Which of the following ratios is calculated by dividing net income by revenues?

Accepted Answer

A)  Return on equity ratio 
B)  Net profit margin ratio 
C)  Current ratio 
D)  Fixed asset turnover ratio 
A)  Return on equity ratio 
B)  Net profit margin ratio 
C)  Current ratio 
D)  Fixed asset turnover ratio

Question 3

Which type of analysis could reveal that a company is relying heavily on debt financing?

Accepted Answer

A)  Common size statements 
B)  Horizontal analysis 
C)  The fixed asset turnover ratio 
D)  Trend analysis 
A)  Common size statements 
B)  Horizontal analysis 
C)  The fixed asset turnover ratio 
D)  Trend analysis

Question 4

The comparative financial statements of B.Darin include the following data:
  
-Use the information above to answer the following question.The fixed asset turnover ratio for the current year is closest to:

Accepted Answer

A)  1.28. 
B)  1.24. 
C)  0.75. 
D)  1.64. 
A)  1.28. 
B)  1.24. 
C)  0.75. 
D)  1.64.

Question 5

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

Accepted Answer

A)  Fixed asset turnover 
B)  Net profit margin 
C)  Inventory turnover 
D)  Earnings per share 
A)  Fixed asset turnover 
B)  Net profit margin 
C)  Inventory turnover 
D)  Earnings per share

Question 6

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

Accepted Answer

A)  37.50. 
B)  64.29. 
C)  2.40. 
D)  2.0. 
A)  37.50. 
B)  64.29. 
C)  2.40. 
D)  2.0.

Question 7

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?

Accepted Answer

A)  Excessive reliance on debt financing 
B)  Loss of key personnel without comparable replacement 
C)  Inadequate maintenance of long-lived assets 
D)  Declining profit margins 
A)  Excessive reliance on debt financing 
B)  Loss of key personnel without comparable replacement 
C)  Inadequate maintenance of long-lived assets 
D)  Declining profit margins

Question 8

A company's sales are $285,000 and $200,000 during the current and prior years,respectively.The percentage change is:

Accepted Answer

A)  42.5%. 
B)  70%. 
C)  29.8%. 
D)  130%. 
A)  42.5%. 
B)  70%. 
C)  29.8%. 
D)  130%.

Question 9

A company's comparative balance sheet show total assets of $990,000 and $900,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

Accepted Answer

A)  10%. 
B)  9%. 
C)  5%. 
D)  4%. 
A)  10%. 
B)  9%. 
C)  5%. 
D)  4%.

Question 10

If net income is rising,but net sales revenue and the gross profit percentage remain the same,then:

Accepted Answer

A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising. 
A)  operating expenses are falling. 
B)  operating expenses are rising. 
C)  cost of goods sold is falling. 
D)  cost of goods sold is rising.

Question 11

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Accepted Answer

A)  Inventory turnover 
B)  Current ratio 
C)  Days to collect ratio 
D)  Days to sell ratio 
A)  Inventory turnover 
B)  Current ratio 
C)  Days to collect ratio 
D)  Days to sell ratio

Question 12

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

Accepted Answer

A)  Company A collects its receivables faster than Company B. 
B)  Company B collects its receivables faster than Company A. 
C)  Company A makes more sales on account than Company B. 
D)  Company B makes more sales on account than Company A. 
A)  Company A collects its receivables faster than Company B. 
B)  Company B collects its receivables faster than Company A. 
C)  Company A makes more sales on account than Company B. 
D)  Company B makes more sales on account than Company A.

Question 13

Which events may indicate going-concern problems?

Accepted Answer

A)  An increase in research and development costs 
B)  A decrease in barriers to expansion 
C)  Additions of patents 
D)  Loss of a key supplier or customer 
A)  An increase in research and development costs 
B)  A decrease in barriers to expansion 
C)  Additions of patents 
D)  Loss of a key supplier or customer

Question 14

Which of these is not one of the categories of ratio analysis?

Accepted Answer

A)  Profitability 
B)  Liquidity 
C)  Solvency 
D)  Probability 
A)  Profitability 
B)  Liquidity 
C)  Solvency 
D)  Probability

Question 15

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 16

A company has $72,500 in inventory at the beginning of the accounting period and $65,500 at the end of the accounting period.Sales revenue is $986,400,cost of goods sold is $572,700,and net income is $124,200 for the accounting period.On average,the number of days to sell inventory is approximately:

Accepted Answer

A)  203. 
B)  44. 
C)  61. 
D)  26. 
A)  203. 
B)  44. 
C)  61. 
D)  26.

Question 17

Which of the following is a profitability ratio?

Accepted Answer

A)  Return on equity 
B)  Times interest earned 
C)  Inventory turnover 
D)  Receivables turnover 
A)  Return on equity 
B)  Times interest earned 
C)  Inventory turnover 
D)  Receivables turnover

Question 18

Vertical analysis:

Accepted Answer

A)  identifies the relative contribution made by each financial statement line item. 
B)  identifies trends over time . 
C)  provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars. 
D)  involves comparing amounts across different financial statements. 
A)  identifies the relative contribution made by each financial statement line item. 
B)  identifies trends over time . 
C)  provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars. 
D)  involves comparing amounts across different financial statements.

Question 19

Which of the measures below is used to measure liquidity?

Accepted Answer

A)  Current ratio 
B)  Debt-to-assets ratio 
C)  Price ÷ Earnings ratio 
D)  Times interest earned 
A)  Current ratio 
B)  Debt-to-assets ratio 
C)  Price ÷ Earnings ratio 
D)  Times interest earned

Question 20

The ratio that measures the percentage of financing from creditors is the:

Accepted Answer

A)  current ratio. 
B)  times interest earned ratio. 
C)  debt-to-assets ratio. 
D)  Price/Earnings ratio. 
A)  current ratio. 
B)  times interest earned ratio. 
C)  debt-to-assets ratio. 
D)  Price/Earnings ratio.

Which of the following is calculated by dividing net income by revenues?

Which of the following ratios is calculated by dividing net income by revenues?

Which type of analysis could reveal that a company is relying heavily on debt financing?

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The fixed asset turnover ratio for the current year is closest to:

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?

A company's sales are $285,000 and $200,000 during the current and prior years,respectively.The percentage change is:

A company's comparative balance sheet show total assets of $990,000 and $900,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

If net income is rising,but net sales revenue and the gross profit percentage remain the same,then:

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

Which events may indicate going-concern problems?

Which of these is not one of the categories of ratio analysis?

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

A company has $72,500 in inventory at the beginning of the accounting period and $65,500 at the end of the accounting period.Sales revenue is $986,400,cost of goods sold is $572,700,and net income is $124,200 for the accounting period.On average,the number of days to sell inventory is approximately:

Which of the following is a profitability ratio?

Vertical analysis:

Which of the measures below is used to measure liquidity?

The ratio that measures the percentage of financing from creditors is the:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

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Exam 13: Measuring and Evaluating Financial Performance

Which of the following is calculated by dividing net income by revenues?

Which of the following ratios is calculated by dividing net income by revenues?

Which type of analysis could reveal that a company is relying heavily on debt financing?

The comparative financial statements of B.Darin include the following data: -Use the information above to answer the following question.The fixed asset turnover ratio for the current year is closest to:

If a company increases the selling price of the product it sells and all other data on the financial statements remains the same,which of the following ratios will be unaffected?

A company has earnings per share of $1.20,it paid a dividend of $.50 per share,and the market price of the company's stock is $45 per share.The price/earnings ratio is closest to:

Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?

A company's sales are $285,000 and $200,000 during the current and prior years,respectively.The percentage change is:

A company's comparative balance sheet show total assets of $990,000 and $900,000,for the current and prior years,respectively.The percentage change to be reported in the horizontal analysis is an increase of:

If net income is rising,but net sales revenue and the gross profit percentage remain the same,then:

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

Company A has a receivables turnover of 8.0.Company B has a receivables turnover of 10.0.Which of the following statements is correct?

Which events may indicate going-concern problems?

Which of these is not one of the categories of ratio analysis?

If the debt-to-assets ratio is 0.63,it means that 37% of the company's financing has been provided by stockholders' equity.

Which of the following is a profitability ratio?

Vertical analysis:

Which of the measures below is used to measure liquidity?

The ratio that measures the percentage of financing from creditors is the:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Filters